Uber Technologies (Uber Stock Quote, Chart, News NYSE:UBER) is back in the news after a promising quarter and guidance aiming for profitability by the year’s end.
And investors could do alright by the name, says Hap Sneddon of CastleMoore Investment, who sees a couple of support levels to buoy the stock going forward.
Uber was perhaps the most-anticipated IPO last year, but the ride-hailing and Uber Eats company disappointed early with shares falling over the back end of 2019. UBER picked it up over the last month and a half and ended the year down 28 per cent to $29.74 per share, but so far 2020 has been much better, with the stock up 34 per cent, even taking into account the big market drop on Monday.
Much of that optimism comes from signs that the company’s money-losing ways may be about to change. Uber, which recorded an incredible quarterly loss of $5.2 billion in its second quarter delivered last summer and then a loss of $1.2 billion for its Q3 delivered in November.
But the fourth quarter fiscal 2019, reported earlier this month, looked better, as losses dropped further to $1.1 billion, which included $243 million in stock-based compensation. Uber’s Q4 featured revenue and EPS of $4.07 billion and negative $0.64 per share compared to analysts’ estimates at $4.06 billion and negative $0.68 per share.
More enticing was management’s guidance which called for EBITDA profitability by the fourth quarter of 2020, a move up from the previous forecast of profitability by 2021.
“2019 was a transformational year for Uber and I’m gratified by our progress, steadily delivering against the commitments we’ve made to our shareholders on our path to profitability,” said Dara Khosrowshahi, CEO, in a February 6 press release.
“We recognize that the era of growth at all costs is over. In a world where investors increasingly demand not just growth, but profitable growth, we are well-positioned to win through continuous innovation, excellent execution, and the unrivalled scale of our global platform,” Khosrowshahi said.
The market responded well to the news, driving the stock up as much as ten per cent on the quarterly results. Sneddon says that investors savvy enough to grab the stock when it was down in the high $20 to low $30 range should be giving themselves a pat on the back.
“You got it really good there at [$30], that was a pretty good spot,” says Sneddon, president and chief portfolio manager at CastleMoore, who spoke to BNN Bloomberg on Monday.
“We’re going to see it sort of fall down here and I think the next place you going to look at is $35.99 for support. It’s down six per cent. Then we would probably look somewhere around $34, so $35 and then $34,” Sneddon said.
This week, Uber announced the launch of the Uber OOH ad platform, a way for advertisers to display ads on top of Uber drivers’ cars. Uber is partnering with digital ad company Adomni for the new platform for two-sided screens to be placed atop vehicles. The potentially lucrative program will get a test run in Atlanta, Phoenix and Dallas starting in April.
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