Earlier this year, Morgan Stanley’s named Uber their top U.S. internet stock pick for 2020 and predicted a 57% rally in the ride-hailing giant’s stock on improving profitability and the potential for additional growth in ride-sharing services. At the time, Morgan Stanley had a $55 price target on Uber’s stock.
Uber supported that thesis by reporting a loss of 64 cents per share in the fourth quarter of 2019 which was a decrease year over year. But the highlight of the earnings report was the better-than expected bottom-line performance with the company’s position of seeing profits by the fourth quarter of 2020. Previously Uber expected to achieve EBITDA profit for the full year in 2021.
In early March, Uber’s CEO, Dara Khosrowshahi said will take a small hit due to the outbreak of the coronavirus, but Uber Eats will like benefit. Dara believes because of the many businesses that Uber is involved with and their independence from supply chains / logistic challenges, the company is well-positioned to handle the spread of the virus.
If that’s the case, why are insiders selling stock now?
Well, according to theinfomration.com, revenues for Uber have sunk by roughly 50% YoY as COVID-19 kicked into gear. This means that Uber's revenue from passenger rides will probably be under $450 million / month for the first quarter of 2020. At all makes sense because as nations are on locker down, Uber drivers who once were making $200 / day, are now making $25/ day, are now making $2.50 / day.
And I guess if Uber Insiders are listening to Wall Street, in particular billionaire short seller, Jim Chanos, now I know why they want out.
“I think the gig economy companies are going to come out of this harmed, not enhanced,” said Chanos, founder of Kynikos Associates.
“I know there’s a body of thought that oh, well everybody will just do food delivery and we’ll all take Ubers and no one is going to buy a car again, and I think the flip side of it is that the labor pool issue for the gig economy companies is going to loom very very large coming out of this crisis.”
“I think both political parties are going to be looking at that pretty hard coming out of the crisis to enhance corporate responsibility in lots of different ways whether it’s keeping employees as independent contractors, whether its restricting buybacks,” Chanos said.
I honestly don't know where price his heading and the chart suggests price is between daily demand and weekly supply.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted via Steemleo