Uber Technologies (NYSE:UBER) finally sees the end of a two-year-long investigation by the City of Chicago by paying a penalty of $10 million. The investigation revealed that Uber listed restaurants on its platform without their consent. Also, the company violated the city’s 15% delivery fee cap that was placed during the pandemic by charging more commission from the restaurant owners.
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During the pandemic, restaurants were already seeing high demand. As a result of these unknown listings, restaurants received orders for items that were out of stock, making it difficult for them to adequately plan for subsequent orders. This resulted in orders being canceled and damaged the restaurant’s reputation.
Of the total penalty, Uber is required to pay $2.25 million to the restaurants that were charged higher commissions. Another $2.5 million will be paid as commission waivers to restaurants that were listed without consent.
About $0.5 million will be paid to restaurants that Uber wrongly listed on its meal delivery platforms. Lastly, $1.5 million will be paid to the city as compensation for the costs and fees incurred during the investigation.
The recent penalty excludes the $3.33 million that Uber had repaid to the restaurants upon discovery of the fee cap violation in September 2021.
Is Uber a Good Buy?
Overall, Wall Street is bullish on Uber. The stock has a Strong Buy consensus rating based on 14 unanimous Buy recommendations. The average UBER price target of $49.07 implies 77.15% upside potential.
Also, Needham analyst Bernie McTernan reiterated a Buy rating on Uber and maintained the price target of $54. He is of the opinion that Uber has the potential to increase gross bookings by entering new verticals with the help of acquisitions.
Also, hedge funds are bullish on the stock. Our data shows that hedge funds have a very positive stance on UBER as they bulk up their holdings in the stock.
