Uber stock forecast: Can the ride-hailing app recover?

Uber has been getting busier over the last year, but what’s the Uber stock forecast?

Uber has had an interesting year. The ride hailing company was rocked by February’s news that the UK’s Supreme Court ruled that it’s drivers could not be treated as self-employed. Legally, this means they are entitled to be treated as workers and receive holiday pay and minimum wage. Uber will also need to establish a pension scheme. But there was some upbeat news for the business and its shareholders as Uber reported a record profit across the entire business – but only if a particular set of measurements were taken into consideration. It is in relation to this that any Uber stock forecast needs to be considered. 

Uber quarterly results

When the company released its latest quarterly update on 4 November, there was good news and bad news. The bad news was that Uber had managed to make a pretty significant loss, losing $1.28 per share. This figure was made worse by it being down from what experts had expected. CNBC said that analysts at Refinitiv had expected the company’s earnings per share (EPS) to represent a loss over the quarter, but one of $0.33. This meant that the shortfall in EPS was nearly 300% worse than had been predicted. 

On the other hand, there was good news for the company in terms of its overall revenues.  These came out at $4.8bn, up 72% from the same quarter last year, and beating the Refinitiv prediction of $4.4bn. 

One of the things that had a negative impact on the company’s finances was Uber’s holding of a stake in Chinese ride hailing company Didi. Crackdowns on businesses by the Beijing government have meant that Didi has ended up costing Uber somewhere in the region of $1.7bn. 

Potential positivity
 

UBER price history

Date Close Change Change(%) Open High Low
Nov 26, 2021 40.38 0.65 1.64% 39.73 40.48 38.63
Nov 25, 2021 41.80 -0.01 -0.02% 41.81 41.82 41.70
Nov 24, 2021 41.81 -0.54 -1.28% 42.35 42.48 41.09
Nov 23, 2021 42.34 0.11 0.26% 42.23 42.95 41.45
Nov 22, 2021 42.24 -1.77 -4.02% 44.01 44.75 41.64
Nov 19, 2021 44.06 -0.83 -1.85% 44.89 45.18 43.35
Nov 18, 2021 44.88 0.84 1.91% 44.04 45.16 43.41
Nov 17, 2021 44.03 -1.41 -3.10% 45.44 45.74 43.63
Nov 16, 2021 45.45 1.66 3.79% 43.79 46.43 43.41
Nov 15, 2021 43.78 -1.19 -2.65% 44.97 45.29 43.33
Nov 12, 2021 44.83 1.85 4.30% 42.98 44.96 42.85
Nov 11, 2021 42.98 -0.16 -0.37% 43.14 44.01 42.28
Nov 10, 2021 43.13 -1.56 -3.49% 44.69 45.15 42.44
Nov 9, 2021 44.68 -0.96 -2.10% 45.64 46.18 43.52
Nov 8, 2021 45.64 -1.00 -2.14% 46.64 47.47 45.36
Nov 5, 2021 46.91 2.70 6.11% 44.21 48.54 43.93
Nov 4, 2021 44.20 -1.87 -4.06% 46.07 46.47 42.31
Nov 3, 2021 45.83 0.96 2.14% 44.87 46.08 44.54
Nov 2, 2021 45.47 0.98 2.20% 44.49 45.85 42.09
Nov 1, 2021 44.48 0.65 1.48% 43.83 44.86 43.48

The company is using an adjusted form of earnings before interest, tax, depreciation and amortisation (EBITDA) that not only excludes the previous items but also items used to help the business deal with the Covid-19 pandemic. These included, the company said, “the cost of personal protective equipment distributed to drivers, driver reimbursement for their cost of purchasing personal protective equipment, the costs related to free rides and food deliveries to healthcare workers, seniors, and others in need as well as charitable donations.”
Uber went on to justify its use of adjusted EBITDA, saying: “Our board and management find the exclusion of the impact of these Covid-19 response initiatives from adjusted EBITDA to be useful because it allows us and our investors to assess the impact of these response initiatives on our results of operations.”

If we take the adjusted EBITDA as the facts of the results, which they are not, necessarily, then things look quite good for the company. The adjusted EBITDA results allow Uber to say it made a profit, with the score by the particular metric coming in at $544m over the course of the quarter. In fact, this score has allowed the company to say that it has turned a profit for the first time ever across its entire business.

In a statement, Uber chief financial officer Nelson Chai said: “While we recognise it’s just a step, reaching total-company adjusted EBITDA profitability is an important milestone for Uber. Not only did our mobility business recover to pre-Covid margins this quarter, our core restaurant delivery business was profitable on an adjusted EBITDA basis for the first time as well, bringing the full delivery segment close to breakeven.”

The company, in effect, splits its operations into two. There is the traditional mobility segment, which is the ride hailing service that made the business well known among younger metropolitan types. The second is its delivery segment, which includes the Uber Eats app and allows people to order groceries and takeaway meals for home delivery. 

Over the most recent quarter, the amount of money earned from mobility came in at $9.9bn, up 67% year on year, while delivery generated $12.9bn, a rise of 50%. The results may well indicate that Covid-19 related restrictions will have had a bigger impact on people wanting to get somewhere than they would have been for people ordering meals and groceries. 

Uber stock history
Uber stock price history - Credit: Currency.com
Uber Technologies Inc
Daily change
40.38
Low: 39.22
High: 40.41

What the markets say

In terms of the markets, they appeared to be fairly positive towards the news coming out of Uber HQ. When the markets closed on 4 November, before the results came out, the Uber stock price was $45.27. When they reopened on 5 November, it was $47.50, representing a rise of just under 5% overnight.  

What does need to be considered in terms of the price is that Uber has done well, but not brilliantly, if we look at things on a year-on-year basis. When the markets opened on 5 November 2020, shares in Uber were worth $40.33. This means that, if we take that as a basic metric of change, then the price has risen a shade under 18% across the year. This is a lot better than it going down, but it may not be the most exciting thing for investors. On the other hand, if we look at the stock’s 52 week high, we can see that it was $64.05, which it hit intraday on 11 February 2021. This means that the price is down more than 25% against that but there is some positivity when we consider the 52 week low was $38.08, which it hit intraday on 16 September. The 5 November open was nearly 25% higher than this. 

Uber share price forecast

When it comes to the Uber stock forecast, things look pretty positive for the company. When CNN Money surveyed 39 analysts for what they thought could happen over the next 12 months, there was a pretty positive outlook. The median Uber stock prediction was $70, which would see the price go up by 54.7% from where it stood on 4 November. This was not the only positive prediction, with the most optimistic of the 39 coming in at $82, up by 81.2% from recent levels. On the other hand, it was not all upbeat forecasts for the Uber share price, with the most pessimistic Uber stock prediction standing at $34, which would see a drop of 24.9% over the next year. 

As far as expert recommendations are concerned, there was also some positivity. Out of 45 analysts polled, the overwhelming majority – 36 – recommended that people buy Uber stock. There were four experts who thought that Uber would outperform over the next year, while a further four suggested that people hold onto their stock for the time being. There was no one who thought the stock would underperform against expectations, while there was just one person who recommended selling Uber.

FAQ

Potentially. Although Uber has been comparatively quiet over the last year, there is always the potential for growth. That said, you will need to do your own research, remember that prices can go down as well as up, and you should never invest more money than you can afford to lose.

It could do. Although the stock price of Uber hasn’t done terribly overall over the course of the last year, it hasn’t done brilliantly either, but there may be room for growth. Anyway, you will need to do your own research, remember that prices can go down as well as up, and you should never invest more money than you can afford to lose.

Stock price forecasts for so far in the future are both somewhat hard to come by and unreliable, but according to AIPickup, it should be worth somewhere between $41.71 and $44.30 in 2031. In other words, by 2031 it should be down from where it is now.  It is worth pointing out, though, that long term forecasts are very often unreliable and wrong. You need to do your own research, remember prices can go down as well as up, and never invest more money than you can afford to lose.

FURTHER READING

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