Uber (UBER) has expanded its footprint into the booming cannabis sector. Reuters reports that the ride-hailing giant will allow people in Ontario, Canada, to place cannabis orders on its Uber Eats app. In April of this year, CEO Dara Khosrowshahi had confirmed they were considering adding support for cannabis deliveries. UBER shares fell 3.69% to close at $42.6 on November 22.
Uber is a California-based transportation networking company. It specializes in offering ride-hailing services while also offering deliveries of food and other items, as well as freight transportation services.
Cannabis on Uber Eats
Uber has added support for Tokyo Smoke on the Uber East app. Consequently, customers will be able to place cannabis orders and pick their orders from the nearest store managed by Tokyo Smoke. Tokyo Smoke is a Canadian lifestyle brand that concentrates on the legal recreational cannabis industry. (See Top Smart Score Stocks on TipRanks)
The strategic partnership with Tokyo Smoke should provide Canadians with a legal way of purchasing safe cannabis. According to Reuters, the move should also help combat the illegal cannabis markets, which currently account for over 40% of non-medical cannabis sales.
Uber is venturing into the cannabis business when sales in the sector are expected to total $4 billion in 2021. Sales are expected to grow to $6.7 billion in 2026, reports Reuters.
Expansion into the cannabis sector comes on the heels of Uber adding support for liquor deliveries through the Eat unit. An Uber spokesperson has since confirmed that the company continues to explore opportunities with merchants who operate in other regions as part of the latest push.
Meanwhile, Morgan Stanley analyst Brian Nowak reiterated a Buy rating on the stock last week, with a $72 price target implying 69.01% upside potential to current levels. According to the analyst, the unveiling of the unified subscription offering, Uber One, provides a greater selection of benefits at lower costs compared to what peers are offering.
The analyst expects a more cohesive subscription offering to drive incremental gross bookings and allow the company to better compete against Lyft and Dash.
Consensus among analysts is a Strong Buy, based on 19 Buys and 1 Hold. The average Uber price target of $69.75 implies 63.73% upside potential to current levels.