victorko

UBER IS DROPPING OUT OF WEDGE - RIPE FOR SHORTING

Short
NYSE:UBER   UBER TECHNOLOGIES INC
UBER is dropping out of a rising wedge pattern. UBER lost $1 billion last quarter and is projected to continue making huge losses in coming quarters. Ride sharing is a competitive venture . In the US there is Lyft and others competing against it. Internationally there is Ola competing. On the delivery business there is Grubhub and Deliveroo competing against UBER. UBER doesn't have a competitive advantage, it is up against competition everywhere. To compete against taxi services, all they did was create an app and network to allow people in their private cars to drive part time. However, it appears not difficult to do and others are introducing services. The Californian Govt is debating whether UBER drivers are not contractors and are employees entitled to sick leave and so on. If this passes, UBER will be under more margin pressure.

Even if you assume UBER will become profitable by 2023/2024, I still struggle to get a DCF valuation for the stock above $30 in the optimistic viewpoint. For the pessimist, UBER could be valued much lower. I think UBER is a good short sell at $43, cover at around $30. If it rapidly falls from here, delay cover to $20 or less.

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