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It is an American company that has become a symbol of the new economy. It has managed to disrupt the taxi industry and become one of the most important home delivery companies in the world. This aspect is rather known as Uberization. This is, of course, Uber.
Customers believe that Uber has a practical side, while most accuse it of unfair competition in the traditional taxi industry. This situation has led to numerous lawsuits around the world. Balancing the pros and cons, investing in Uber stocks means first and foremost taking advantage of the digitalization of the economy.
➠ On May 10, 2019, Uber went public with a market capitalization of $ 82 billion, as it was expected to reach $ 120 billion.
Its business model can be considered questionable because the company faces legal and regulatory risks that could undermine its growth prospects.
What is Uber - Uber Company History
Uber was founded as UberCab in 2009. Its founders, Travis Kalanick and Oscar Salazar, found the process of finding a taxi in a big city a real challenge. Thanks to information and communication technologies, they have created, with the help of Garrett Camp (which will join their project), a mobile application for booking a private driver on request, UberCab.
UberCab's goals are many: to improve the living conditions of the urban population, to reduce rush hour traffic, and to be one of the world's leaders in public transportation. Later, UberCab became Uber by taking over the uber.com domain, which was then a blogging and social networking service.
In 2010, the Uber mobile app was officially launched in San Francisco on IOS and Android platforms.
Development through fundraising
To meet global demand and grow in December 2011, Uber solicited funds from well-known banks, sovereign wealth funds or executives such as Jeff Bezos of Amazon. Uber has expanded its VTC (driverless passenger car) business to the United States and then to more than 50 countries.
In 2013, Google, under the name Google Ventures, took a share of Uber's capital. In 2013, Google, under the name Google Ventures, took a share of Uber's capital. In 2014, Uber launched in China, but will have to face the national leader in online booking VTC, Didi Chuxing. In the same year, the American company obtained new funds from another member of GAFA (Google, Apple, Facebook and Amazon), namely Facebook.
In order to improve its services, the actions of the Uber group have taken over the Bing Maps mapping service from Microsoft. In June 2016, Saudi Arabia's public investment fund became a 5% stake in Uber. Two months later, Uber abandoned its Chinese operations in favor of its competitor Didi Chuxing. Didi Chuxing then took over the business. Instead, Uber took a 20% stake in the Chinese company.
In July 2017, Uber integrated its activities in Russia and the CIS countries with those of the Russian company Yandex to create a joint venture in which the American company has a stake of approximately 37%.
Although the company was overshadowed by social events, this did not stop it from raising new funds from the Japanese holding company, Softbank.
In June 2015, in Uber, Uber launched a national strike of taxi drivers. They criticized the UberPop app, which offers low-cost services by connecting VTC drivers and allowing access to unqualified drivers.
After several lawsuits, the UberPop app was permanently banned in France. The French authorities considered it to be a transport service, while Uber considered it to be a car-sharing service.
In March 2018, Uber acquired part of the shares of the Singaporean company Grab, which specializes in connecting the customer with the service provider.
In preparation for the initial public offering in 2019, Uber continued its international expansion in the Middle East by buying Careem for $ 3.1 billion.
In May 2019, Uber was listed on the New York Stock Exchange with a market capitalization of $ 82 billion.
It is one of the top 10 highest IPOs in the United States. One year later, Uber announced a restructuring due to the Covid-19 virus, in which it reduced its workforce by 25% and refocused on passenger transport and food delivery activities.
In the summer of 2020, Uber strengthened its position in the UK by purchasing the company Autocab, which specializes in connecting customers and taxis. In December 2020, Uber abandoned its autonomous car project by selling its Uber Advanced Technologies Group subsidiary to the American startup Aurora.
Following this transaction, Uber acquires a 26% stake in Aurora.
In February 2021, Uber diversified into online alcohol delivery by purchasing the Drizly online platform.
Uber Stock - Company Key Data
March 2009: Founding of Uber by Travis Kalanick and Oscar Salazar;
July 2010: Official launch of the Uber mobile app on iOS and Android platforms;
2011: Expanding Uber's business in the United States and the world's largest cities. This was done with new funding from institutional investors and Amazon founder Jeff Bezos;
2014: Launch of Uber in China and its Uber Eats online food delivery service;
2016: Acquisition of Microsoft's Bing Maps mapping department;
July 2017: Creation of a joint venture with the Russian company Yandex to carry out its activities in Russia and the CIS countries;
March 2018: Acquisition of a stake in the Singaporean company Grab;
May 2019: Uber is listed on the New York Stock Exchange, with a lower capitalization than financial analysts expected;
May 2020: Uber strategically shifts to transportation and food delivery and reduces 25% of the workforce due to the Covid-19 crisis;
July 2020: Acquisition of Postmates and Routematch, American companies specializing in the delivery of food and, respectively, software dedicated to public transport;
August 2020: Acquisition of the British company Autocab from the taxi services sector for customers;
December 2020: Gives up its Uber Advanced technologies autonomous car project;
February 2021: Acquisition of Drizly in the field of online delivery of alcoholic beverages.
Uber Shares - Company Activity
Uber has evolved a lot since the beginning of its business. In addition to the activity of online reservations for passenger transport, the American company has diversified into other services, such as:
Uber Eats, in the field of online food delivery, which is its second source of income;
Uber Copter, for online helicopter flight reservations;
Uber Rent, in leasing;
Uber Freight, a platform that connects road hauliers and shippers.
Uber also has other subsidiaries, such as Postmates, Careem and Comershop.
Uber's business is divided into four distinct activities:
Mobility, which includes the online booking service for vehicles such as cars, motorcycles or minibuses. Uber's initial business represents 54.5% of revenue;
Delivery, which includes online food delivery services through Uber Eats. Uber is collaborating with several big names in the fast food industry, such as McDonald's, Starbucks, KFC, Burger King, Domino's Pizza and Subway. This is a business that has grown exponentially due to the unavailability of eating in restaurants due to Covid-19 restrictions. This represents 35% of sales;
Freight, a freight logistics business. Uber acts as a freight broker, connecting road haulers and forwarders. This represents 9% of its revenue;
ATG & Other Technology Programs. This activity is dedicated to the development of autonomous vehicles and new technologies for car sharing. This represents 1% of sales;
In terms of the geographical distribution of its revenues, the United States remains the main market with 54.6%. It is followed by the EMEA (Europe, Middle East and Africa), Latin America and Asia, with 18.7%, 11.6% and 10.3%, respectively.
Uber Stock - Uber shareholders
At the time of the IPO, there were two major shareholders: one of its founders, Travis Kalanic, and the Japanese group Softbank. The former sold almost 20% of the group's shares at the end of 2019, and the latter gradually gave up its shares in 2020 and, more recently, at the beginning of 2021.
Currently, Uber's shareholders are primarily institutional investors, asset management companies, including SB Investment Advisers (UK), Benchmark Capital Management, Fidelity Management & Research and Morgan Stanley. The individual shareholders represent 14.4% of the group's shares.
Uber Stock - Uber Competitors
Uber operates in highly segmented markets, both nationally and internationally. In the United States, competition is fierce in terms of mobility, deliveries, and freight, given the presence of decades-old companies and low-cost players.
In other countries, such as China and Russia, Uber has been forced to give up its activities, but has an indirect presence through stakes in companies in this sector.
The existence of low barriers to entry encourages access by new entrants. When Uber launches a new product or service, it can be legally copied by its competitors at a lower cost. In fact, the cost of purchasing is low in order to maintain a solid customer base and to hope for a steady increase in revenue.
Competitors in each business segment are:
Lyft (USA), Didi (China), OLA Cabs (India), Bolt (Estonia), Gojek (Indonesia), Le Cab and Chauffeur Privé (France), taxi companies, public transport, etc., operating in the field of urban mobility ;
DoorDash and Grubhub (USA), Deliveroo (UK), Just Eat Takeaway (Netherlands), Rappi and iFood (Latin America), Delivery Hero (Germany) in the field of delivery services. Competition can extend indirectly to supermarket chains, grocery stores and restaurants;
XPO Logistics, CH Robinson, DHL, FedEx, UPS in the field of freight in the USA.
Uber Stock - Growth Outlook
The reason Uber shares are struggling to become a profitable company is that its business model has no barriers to entry. Its mobile application can be intelligently copied by anyone at a low cost. There is no shortage of competitors with ambitious players.
It is a company that has the art of circumventing the rules of the labor code. As her drivers and suppliers were considered self-employed, she was exempted from paying social security contributions.
In the context of a regulatory framework that will tighten in the near or distant future, a fierce war has begun between Uber and public authorities. The latter want to reclassify drivers and deliverers who work for Uber as employees.
Customers benefit from the convenience of this convenience by avoiding long waiting times on the spot. However, its financial situation remains worrying as the company spends its cash flow to make a profit. In the face of stiff competition, he will have to keep spending to maintain his leadership position.
Fortunately, there is a positive aspect that Uber can rely on in the coming years. The diversification of its food delivery business with Uber Eats saw an exceptional increase in 2020. Uber Eats offset the loss of revenue from VTC.
Will it be possible to rely on autonomous cars as well? Theoretically, it would be a step forward to give a second breath to its development through economies of scale. By replacing drivers with autonomous vehicles, Uber could recover all of its revenue.
However, giving up its autonomous car project has seriously affected Uber's goals. The American company prefers to work with startups to save costs and focus on its strategic activities.
Uber Actions - Risks and Opportunities
Investing in an action following an initial public offering may not be a good idea. Low trading history does not give you a solid basis for taking a buy or sell position. So it would be better to wait a few months, quarters or even years to address this type of issue.
Distrust is the order of the day when a company goes public without first making a profit. Uber's initial public offering is no exception to this trend. Volatility can reach considerable proportions if it does not yield results in line with market expectations.
Now, with a broader trading history, the fact that interest in short selling has gradually declined suggests that Uber shares are becoming less and less speculative. Although profitability and profitability are not yet on track, growth prospects are more optimistic due to the diversification of its activities in the field of online food delivery and freight logistics.
In addition, Uber wants to develop BtoB (Business-to-Business) activities to ensure revenue stability and not depend on consumer whims.
Another positive aspect is that Uber outperformed the S&P 500 CFD in 2020, with a gain of 64.57% compared to 17.4% in the US index. If we look at the graphical evolution of stocks, the momentum is positive, the stock price being well above the moving average at 200 intervals.
However, buying Uber shares still carries risks. First, the regulatory framework could level the playing field between VTC companies and traditional entrants in that market. Second, VTC drivers and deliverers are demanding more benefits in terms of working conditions. These potential costs could affect the company's short-term economic and business model.
Third, the growth model based on fundraising and procurement has its limitations. The lack of a positive cash flow remains an obstacle. Financial markets could lose patience if the balance sheet situation continues to deteriorate. In addition, Moody's and S&P rating agencies give it an investment rating.
In the end, Uber will have to gain market share in each of its activities, in the face of stiff competition. This will require them to reinvest more than they earn in order to achieve their growth goals.
Is this an action aimed at a medium to long-term investment horizon? Investors believe that Uber is a fast-growing stock. They are willing to pay a lot for a long-term increase if the cost of capital and the risk premium of equity are low. However, if interest rates rise sharply, Uber shares could suffer as a result of the immediate disappearance of a cash flow.
Customers believe that Uber has a practical side, while most accuse it of unfair competition in the traditional taxi industry. This situation has led to numerous lawsuits around the world. Balancing the pros and cons, investing in Uber stocks means first and foremost taking advantage of the digitalization of the economy.
➠ On May 10, 2019, Uber went public with a market capitalization of $ 82 billion, as it was expected to reach $ 120 billion.
Its business model can be considered questionable because the company faces legal and regulatory risks that could undermine its growth prospects.
What is Uber - Uber Company History
Uber was founded as UberCab in 2009. Its founders, Travis Kalanick and Oscar Salazar, found the process of finding a taxi in a big city a real challenge. Thanks to information and communication technologies, they have created, with the help of Garrett Camp (which will join their project), a mobile application for booking a private driver on request, UberCab.
UberCab's goals are many: to improve the living conditions of the urban population, to reduce rush hour traffic, and to be one of the world's leaders in public transportation. Later, UberCab became Uber by taking over the uber.com domain, which was then a blogging and social networking service.
In 2010, the Uber mobile app was officially launched in San Francisco on IOS and Android platforms.
Development through fundraising
To meet global demand and grow in December 2011, Uber solicited funds from well-known banks, sovereign wealth funds or executives such as Jeff Bezos of Amazon. Uber has expanded its VTC (driverless passenger car) business to the United States and then to more than 50 countries.
In 2013, Google, under the name Google Ventures, took a share of Uber's capital. In 2013, Google, under the name Google Ventures, took a share of Uber's capital. In 2014, Uber launched in China, but will have to face the national leader in online booking VTC, Didi Chuxing. In the same year, the American company obtained new funds from another member of GAFA (Google, Apple, Facebook and Amazon), namely Facebook.
In order to improve its services, the actions of the Uber group have taken over the Bing Maps mapping service from Microsoft. In June 2016, Saudi Arabia's public investment fund became a 5% stake in Uber. Two months later, Uber abandoned its Chinese operations in favor of its competitor Didi Chuxing. Didi Chuxing then took over the business. Instead, Uber took a 20% stake in the Chinese company.
In July 2017, Uber integrated its activities in Russia and the CIS countries with those of the Russian company Yandex to create a joint venture in which the American company has a stake of approximately 37%.
Although the company was overshadowed by social events, this did not stop it from raising new funds from the Japanese holding company, Softbank.
In June 2015, in Uber, Uber launched a national strike of taxi drivers. They criticized the UberPop app, which offers low-cost services by connecting VTC drivers and allowing access to unqualified drivers.
After several lawsuits, the UberPop app was permanently banned in France. The French authorities considered it to be a transport service, while Uber considered it to be a car-sharing service.
In March 2018, Uber acquired part of the shares of the Singaporean company Grab, which specializes in connecting the customer with the service provider.
In preparation for the initial public offering in 2019, Uber continued its international expansion in the Middle East by buying Careem for $ 3.1 billion.
In May 2019, Uber was listed on the New York Stock Exchange with a market capitalization of $ 82 billion.
It is one of the top 10 highest IPOs in the United States. One year later, Uber announced a restructuring due to the Covid-19 virus, in which it reduced its workforce by 25% and refocused on passenger transport and food delivery activities.
In the summer of 2020, Uber strengthened its position in the UK by purchasing the company Autocab, which specializes in connecting customers and taxis. In December 2020, Uber abandoned its autonomous car project by selling its Uber Advanced Technologies Group subsidiary to the American startup Aurora.
Following this transaction, Uber acquires a 26% stake in Aurora.
In February 2021, Uber diversified into online alcohol delivery by purchasing the Drizly online platform.
Uber Stock - Company Key Data
March 2009: Founding of Uber by Travis Kalanick and Oscar Salazar;
July 2010: Official launch of the Uber mobile app on iOS and Android platforms;
2011: Expanding Uber's business in the United States and the world's largest cities. This was done with new funding from institutional investors and Amazon founder Jeff Bezos;
2014: Launch of Uber in China and its Uber Eats online food delivery service;
2016: Acquisition of Microsoft's Bing Maps mapping department;
July 2017: Creation of a joint venture with the Russian company Yandex to carry out its activities in Russia and the CIS countries;
March 2018: Acquisition of a stake in the Singaporean company Grab;
May 2019: Uber is listed on the New York Stock Exchange, with a lower capitalization than financial analysts expected;
May 2020: Uber strategically shifts to transportation and food delivery and reduces 25% of the workforce due to the Covid-19 crisis;
July 2020: Acquisition of Postmates and Routematch, American companies specializing in the delivery of food and, respectively, software dedicated to public transport;
August 2020: Acquisition of the British company Autocab from the taxi services sector for customers;
December 2020: Gives up its Uber Advanced technologies autonomous car project;
February 2021: Acquisition of Drizly in the field of online delivery of alcoholic beverages.
Uber Shares - Company Activity
Uber has evolved a lot since the beginning of its business. In addition to the activity of online reservations for passenger transport, the American company has diversified into other services, such as:
Uber Eats, in the field of online food delivery, which is its second source of income;
Uber Copter, for online helicopter flight reservations;
Uber Rent, in leasing;
Uber Freight, a platform that connects road hauliers and shippers.
Uber also has other subsidiaries, such as Postmates, Careem and Comershop.
Uber's business is divided into four distinct activities:
Mobility, which includes the online booking service for vehicles such as cars, motorcycles or minibuses. Uber's initial business represents 54.5% of revenue;
Delivery, which includes online food delivery services through Uber Eats. Uber is collaborating with several big names in the fast food industry, such as McDonald's, Starbucks, KFC, Burger King, Domino's Pizza and Subway. This is a business that has grown exponentially due to the unavailability of eating in restaurants due to Covid-19 restrictions. This represents 35% of sales;
Freight, a freight logistics business. Uber acts as a freight broker, connecting road haulers and forwarders. This represents 9% of its revenue;
ATG & Other Technology Programs. This activity is dedicated to the development of autonomous vehicles and new technologies for car sharing. This represents 1% of sales;
In terms of the geographical distribution of its revenues, the United States remains the main market with 54.6%. It is followed by the EMEA (Europe, Middle East and Africa), Latin America and Asia, with 18.7%, 11.6% and 10.3%, respectively.
Uber Stock - Uber shareholders
At the time of the IPO, there were two major shareholders: one of its founders, Travis Kalanic, and the Japanese group Softbank. The former sold almost 20% of the group's shares at the end of 2019, and the latter gradually gave up its shares in 2020 and, more recently, at the beginning of 2021.
Currently, Uber's shareholders are primarily institutional investors, asset management companies, including SB Investment Advisers (UK), Benchmark Capital Management, Fidelity Management & Research and Morgan Stanley. The individual shareholders represent 14.4% of the group's shares.
Uber Stock - Uber Competitors
Uber operates in highly segmented markets, both nationally and internationally. In the United States, competition is fierce in terms of mobility, deliveries, and freight, given the presence of decades-old companies and low-cost players.
In other countries, such as China and Russia, Uber has been forced to give up its activities, but has an indirect presence through stakes in companies in this sector.
The existence of low barriers to entry encourages access by new entrants. When Uber launches a new product or service, it can be legally copied by its competitors at a lower cost. In fact, the cost of purchasing is low in order to maintain a solid customer base and to hope for a steady increase in revenue.
Competitors in each business segment are:
Lyft (USA), Didi (China), OLA Cabs (India), Bolt (Estonia), Gojek (Indonesia), Le Cab and Chauffeur Privé (France), taxi companies, public transport, etc., operating in the field of urban mobility ;
DoorDash and Grubhub (USA), Deliveroo (UK), Just Eat Takeaway (Netherlands), Rappi and iFood (Latin America), Delivery Hero (Germany) in the field of delivery services. Competition can extend indirectly to supermarket chains, grocery stores and restaurants;
XPO Logistics, CH Robinson, DHL, FedEx, UPS in the field of freight in the USA.
Uber Stock - Growth Outlook
The reason Uber shares are struggling to become a profitable company is that its business model has no barriers to entry. Its mobile application can be intelligently copied by anyone at a low cost. There is no shortage of competitors with ambitious players.
It is a company that has the art of circumventing the rules of the labor code. As her drivers and suppliers were considered self-employed, she was exempted from paying social security contributions.
In the context of a regulatory framework that will tighten in the near or distant future, a fierce war has begun between Uber and public authorities. The latter want to reclassify drivers and deliverers who work for Uber as employees.
Customers benefit from the convenience of this convenience by avoiding long waiting times on the spot. However, its financial situation remains worrying as the company spends its cash flow to make a profit. In the face of stiff competition, he will have to keep spending to maintain his leadership position.
Fortunately, there is a positive aspect that Uber can rely on in the coming years. The diversification of its food delivery business with Uber Eats saw an exceptional increase in 2020. Uber Eats offset the loss of revenue from VTC.
Will it be possible to rely on autonomous cars as well? Theoretically, it would be a step forward to give a second breath to its development through economies of scale. By replacing drivers with autonomous vehicles, Uber could recover all of its revenue.
However, giving up its autonomous car project has seriously affected Uber's goals. The American company prefers to work with startups to save costs and focus on its strategic activities.
Uber Actions - Risks and Opportunities
Investing in an action following an initial public offering may not be a good idea. Low trading history does not give you a solid basis for taking a buy or sell position. So it would be better to wait a few months, quarters or even years to address this type of issue.
Distrust is the order of the day when a company goes public without first making a profit. Uber's initial public offering is no exception to this trend. Volatility can reach considerable proportions if it does not yield results in line with market expectations.
Now, with a broader trading history, the fact that interest in short selling has gradually declined suggests that Uber shares are becoming less and less speculative. Although profitability and profitability are not yet on track, growth prospects are more optimistic due to the diversification of its activities in the field of online food delivery and freight logistics.
In addition, Uber wants to develop BtoB (Business-to-Business) activities to ensure revenue stability and not depend on consumer whims.
Another positive aspect is that Uber outperformed the S&P 500 CFD in 2020, with a gain of 64.57% compared to 17.4% in the US index. If we look at the graphical evolution of stocks, the momentum is positive, the stock price being well above the moving average at 200 intervals.
However, buying Uber shares still carries risks. First, the regulatory framework could level the playing field between VTC companies and traditional entrants in that market. Second, VTC drivers and deliverers are demanding more benefits in terms of working conditions. These potential costs could affect the company's short-term economic and business model.
Third, the growth model based on fundraising and procurement has its limitations. The lack of a positive cash flow remains an obstacle. Financial markets could lose patience if the balance sheet situation continues to deteriorate. In addition, Moody's and S&P rating agencies give it an investment rating.
In the end, Uber will have to gain market share in each of its activities, in the face of stiff competition. This will require them to reinvest more than they earn in order to achieve their growth goals.
Is this an action aimed at a medium to long-term investment horizon? Investors believe that Uber is a fast-growing stock. They are willing to pay a lot for a long-term increase if the cost of capital and the risk premium of equity are low. However, if interest rates rise sharply, Uber shares could suffer as a result of the immediate disappearance of a cash flow.
