Ride-hailing company Uber Technologies (Uber’s Stock Quote, Chart NYSE:UBER) is not wanting for critics during its early days as a publicly-traded company, but even with its rocky start and lingering questions about profitability, there’s no doubting Uber’s brand power, says Scotia Wealth’s Greg Newman, who thinks that investors could sock away a bit of Uber and wait for the company to grow into itself.
“They’re not going to make any money for another couple of years, so this is a real tough one. It’s a speculative name,” says Newman, senior wealth advisor and director of wealth management at Scotia Wealth, to BNN Bloomberg on Wednesday.
“A lot of people criticize them for just having the platform and that anybody can just get in and have that platform but they really do have their tentacles into other things like Uber Eats. And this is an iconic name —you can order a Lyft and people say, ‘Oh, I ordered an Uber’— and that really does mean something,” he says.
Uber made its trading debut in early May to much fanfare and a $75-billion IPO, which ended up being below the $120 billion the company had initially hoped for. The stock dropped almost eight per cent in its first day of trading but has since rallied and is now up about six per cent since its IPO date.
The company reported its first quarterly earnings as a public company at the end of May, showing revenue of $3.1 billion for its Q1 2019, a 20-per-cent increase year-over-year, and a loss of $1 billion. (All figures in US dollars.)
Newman says that Uber could take another couple of years to gain its feet, as investors are still waiting for clarity on when the company will start making a profit.
“I think that this whole sharing is probably in its infancy,” he says. “I don’t think that you’re going to see any fireworks from this name anytime soon until there’s better visibility, but 2021, 2022, I think that if you own a little bit of this, you’re probably going to be happier that you did it as opposed to you didn’t.”
“They’ve got a brand name here. I think that you can own a little bit and just put it away,” he says.
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