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Uber is Likely to Ride Out the Challenging Environment, Says Analyst
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Uber is Likely to Ride Out the Challenging Environment, Says Analyst

Story Highlights

The ridesharing industry is still in the process of recovery. Top-rated analyst Mark Mahaney, who has a 53% success rate, remains bullish about Uber in this volatile macro environment. Let us look at why the analyst is upbeat about the stock.

Shares of Uber (NYSE: UBER) were down 5.1% on Monday to close at $21.19 after the mobility company found itself in the spotlight for all the wrong reasons.

According to a Guardian report, which trawled through 124,000 leaked documents, Uber went on a charm offensive targeting media houses across India and Europe to “secure more favourable treatment from governments.”

These documents were leaked to the Guardian by Mark MacGann, former chief lobbyist at Uber in Europe, the Middle East, and Africa.

Uber responded to these leaked documents and stated, “We have not and will not make excuses for past behaviour that is clearly not in line with our present values. Instead, we ask the public to judge us by what we’ve done over the last five years and what we will do in the years to come.”

This controversy aside, shares of Uber have not fared well this year and have tanked 51.8% this year even after the ridesharing company’s revenues soared 136% year-over-year to $6.9 billion. However, the loss per share of $3.04 was wider than analysts’ expectations of $0.24 and the year-ago loss of $0.06 per share.

The company anticipates that in the second quarter, gross bookings could vary from $28.5 billion to $29.5 billion, while adjusted EBITDA could range between $240 million and $270 million.

However, Evercore analyst Mark Mahaney lowered his estimates for Uber considering the “softening macro environment.”

Mahaney’s Q2 Outlook for Uber

The analyst estimates that Uber is likely to announce its Q2 results in early August and mobility bookings are likely to be $12.3 billion, up 15% quarter-on-quarter. When it comes to the delivery business, Mahaney anticipates that Uber’s delivery gross bookings are likely to be $14.5 billion, a rise of 12% year-over-year.

Overall, the analyst has projected Uber to generate revenues of $30.3 billion in FY22 with an adjusted EBITDA of $1.3 billion, a decline of 1% and 2% each from the analyst’s earlier estimates.

Mahaney’s Ridesharing Survey Points to Industry Recovery

Moreover, the top-rated analyst’s Annual U.S. Ridesharing Survey and intra-quarter data points painted an optimistic picture regarding the ridesharing industry’s recovery. The analyst noted that there was still a “long runway for penetration –penetration remained above pre-COVID levels, but still intrinsically low with 42% of respondents having used Rideshare.”

Mahaney also pointed out that user engagement and frequency continued to improve, with 28% of the users surveyed using a ridesharing service.

As a result, the analyst remained upbeat about the stock with a Buy rating but lowered the price target to $69 from $74, implying an upside potential of 225.6% on the stock.

Other analysts on the Street are also bullish and have rated Uber a Strong Buy based on 27 Buys and two Holds. The average Uber price target of $47.44 implies an upside potential of 125.3% at current levels.

Bottom Line

While the macro environment could prove to be challenging for Uber, it is still expected that the mobility giant will drive through this environment.

Uber also scores an eight out of 10 on the TipRanks Smart Score system, indicating that the stock is highly likely to outperform the market.

The TipRanks Smart Score system is a data-driven, quantitative scoring system that analyses stocks on eight major parameters and comes up with a Smart Score ranging from 1 to 10. The higher the score, the more likely the stock will outperform the market.

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