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Uber Stock Has Significant Upside Potential
Stock Analysis & Ideas

Uber Stock Has Significant Upside Potential

Uber Technologies (UBER) is a popular ride-hailing and delivery service. I am bullish on the stock.

Among the most challenged businesses during the onset of the COVID-19 pandemic was Uber, as people hesitated to go outside for rides.

However, the company made a smart move as it expanded into food delivery. Uber’s business problems also subsided as COVID-19 vaccines became more widely available to the public.

Nonetheless, as we’ll see in a moment, UBER stock isn’t doing well in 2021. Does this mean that there are major problems with the company?

Not necessarily. The company is making an effort to expand its market footprint abroad, and one big-name analyst envisions huge upside for UBER stock. (See Analysts’ Top Stocks on TipRanks)

A Quick Look at UBER Stock

It’s surprising to see how poorly UBER stock has done in 2021. Back in February, the stock was on a definite uptrend, and even touched a high of $64.05.

Several times, the buyers attempted to take UBER stock above $64 but were rejected. Then, starting in mid-April, a multi-month bear market ensued.

Breaking below the key $40 level in September was a particularly stressful moment. As of early December, UBER stock remains below that level, unfortunately.

If the share price can get from $40 to $60, that would represent a 50% gain. It’s not an unrealistic scenario, as UBER stock poked above $60 several times this year already.

Besides, as we’ll see in a moment, one notable analyst sees UBER potentially doubling in price.

Expanding User Base

One thing that informed investors should remember is that Uber isn’t limited to one country.

It’s truly an international businesses, and Uber is proving this through a new feature rollout.

Just recently, Uber revealed that the company is introducing a feature that will allow users in India to book rides through the messaging service WhatsApp.

WhatsApp is owned by Facebook (FB), also known as Meta. Uber’s new feature rollout could help the company access the more than 500 million-person WhatsApp user base in India.

“Starting this week, we are rolling out a new service that gives people the option to book an Uber ride via an official Uber WhatsApp chatbot,” Uber said in early December.

Don’t get the wrong idea — people in India were already able to use Uber’s ride-hailing services. This feature will just make it easier.

“Riders will no longer need to download or use the Uber app. Everything from user registration, booking a ride, and getting a trip receipt will be managed within the WhatsApp chat interface,” Uber clarified.

A Top Pick

Clearly, the WhatsApp integration should bolster Uber’s market presence in India.

Overall, it looks as if UBER stock’s low price doesn’t reflect the company’s true intrinsic value.

Indeed, one big-name analytic firm is bracing for significantly higher prices in UBER stock.

Reportedly, analysts at UBS (UBS) named the ride-hailing giant as a “top pick.” They even went so far as to say they expect the shares could more than double.

UBS’s idea could have merit. Bear in mind, Uber’s adjusted profit for 2021’s third quarter came in at $8 million. That figure was enough to put Uber in the black for the first time.

So, financially speaking, it appears that Uber’s on the right track. Hopefully, this could be reflected in higher UBER stock prices — even to the point of doubling, eventually.

Wall Street’s Take

According to TipRanks’ analyst rating consensus, UBER is a Strong Buy, based on 19 Buys and one Hold. The average Uber price target is $69.75, implying 76.2% upside potential.

The Takeaway

The drawdown of UBER stock in 2021 seems excessive. The company isn’t in deep trouble.

If anything, we should say that Uber’s on the right fiscal path. Plus, the company is taking steps to increase its market footprint internationally.

Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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