Taxi making record profit and now they can buy back shares cheap thanks to stupid short sellers! TAXI used to be a cash machine -now it is a growth machine too!
That would be the normal trajectory but I would prefer that they buyback shares while the price is so low. The yield is so high that it is obvious that the market does not value it as a positive. Over 7% yield actually scares investors away. I am telling IR that I want to see a significant share repurchase which will lead to EPS growth that the market can not ignore.
I am surprised the shares are not up more on the rules alone. Short interest continues higher.
I have been reading and it looks to me like TLC is delicately returning regulation -if you don't have a medallion you can not operate a taxi in NYC. A black car is always a black car....
And the kicker is that they require the services to report the rides -so if uber lies to drivers that they don't have to obey regulation uber is on the hook for fines. No more 'keep operating while our lawyers argue in count' BS.
Clearly they have the ability to buy back shares and at today's depressed price that is a better use of cash. I figure they will announce a major buyback program -tens of millions$ multiple quarter length. If the price stays low they cut the share count big time. If the price jumps before they can buy, they will raise the dividend as required by law for BDC.
Now seems to be the right time to push a short squeeze in TAXI shares. The first thing you need to realize is that the shares that are sold short ARE YOURS if you hold them in a 'MARGIN' account. If you are not buying shares on margin (very few TAXI investors do) then there is no reason for you to hold them in a margin account. It only takes a few seconds to call your broker and have your account status changed. When you change to a 'CASH' account your shares stay in your account -the broker can not make money lending them to the short seller. The broker never pays you any of the interest he gets and ultimately he is risking your shares.
People think that it doesn't matter but I HAVE SEEN MANY COMPANIES SHARES GO UNAVAILABLE FOR SHORTS. That stops the short sellers from manipulating price immediately and it is the common precursor to a short squeeze. At the very least it will cause the short interest price to rise. My understanding is that TAXI cost 7% to short and that was before it started rising. Add in the 10% dividend and it gets costly to short. Reducing the shares available to short will leave the brokers 'naked' which is illegal. When they call around to borrow shares they will tip off their counterparts that there is potential for a squeeze -which institutions read as 'EASY MONEY!' and you double your money as they rush to buy.
I figured there would be a short squeeze when TAXI reported much better than expected earnings. I figured the shorts would cover. What I didn't expect was smart shorts covering and buying from DUMB shorts!
Buying shares is a much better use of money. The yield is already so high that it is cited as a caution flag. It is counterproductive to increase the dividend from such a high level.
The entire company is based on the premise that it is a 'technology' not just breaking all the laws that regulate the taxi industry.
I think the big Uber question is how much they are paying for lawyers, lobbyists, and goons intimidating rival drivers. There are indications that many Uber drivers are not making enough to survive after they are recruited and saddled with car payments. The reason Uber has such a high valuation is the assumption that the drivers get replaced by autonomous cars and drown in debt while Uber goes from collecting 20% to 100% of fares. The clear losers in Uber's plan are the drivers and the local governments. Why should the cities abandon their regulation just so Uber can make all the money that would have gone to the city?
I am stunned at the political cooperation behind self driving vehicles. I was a development engineer in automotive. We knew the value long ago but have been too afraid of lawsuits to offer product. Governments offering licence to to test systems on public streets is such a breakthrough you can not comprehend it's significance -it is not a question of if but when. The media trivializes self driving cars as a way to be able to look at your phone instead of wasting focus on driving. The true value of self driving tech is throughput of urban road infrastructure and it's a trillion dollar improvement. Based on capabilities when I retired and the current status I predict that large numbers of cars will include the ability to self drive on the highway within three years. Not having self driving capability will limit the lanes you are allowed to drive in within 7 years. Completely driverless cars will appear in the next 5 years and dominate taxis within 10.
Uber drivers signing 5 year leases are COMPLETELY SCREWED!
There is a guy (don't know nationality) that did not like the interest rate that his lender (Citi I think) offered to roll his big medallion backed loan. Higher rates would cut his profit so he is campaigning to get the city to enforce medallion regulation -not let Uber operate illegal taxis.
Eagle-poop is spinning and campaigning against this guys perfectly sensible argument to the city government.
This brings up a new point -as medallion loans are refinanced (about every 2 years) the market interest rate and rate spread will increase. TAXI will see profits increase!
Uber will fight the new rules tooth and nail. The requirement that Uber be required to document trips makes it harder to hide from liabilities -accidents and crimes. The regulations on cross pooling cars/rides cuts their ability to monopolize car fleet providers -weakening their negotiation of price. The regulation establishing penalties for violating rules will finally give regulators what they need to get a handle on this mass of new taxi wanabes.
Uber does nothing but break laws and fight to overturn them. This is the first instance of the world fighting back to assert that Uber is not above the law.
At the current price share buybacks are far better than a dividend increase. The buybacks today multiply the EPS tomorrow. When the price/book get around 1.3 they can increase the dividend 20-30%.
uber is nothing more than an ap to organize "gypsy cabs". Gypsy cabs are the standard in all third world countries where 'regulation' is nothing more than bribes paid to cops every time they are caught. Uber is trying to make the same thing work in developed countries that have laws against it. Uber is trying to get developed world prices for third world product while sticking the drivers with all the cost and liability.
You are dead right about a generic application. Uber provides NOTHING! This is the perfect application for a pear network like napster. What amazes me more than the low price of TAXI shares is the crazy valuation of Uber. What the hell are they thinking? Have you seen the insanely expensive offices they are building in san fran?
TAXI was north of $17 when they had no problem with a big secondary at around $16. I mention the secondary because it is a large number of shares and there is lots of disclosure and scrutiny associated. The Uber attack followed soon after and pushed shares well below book value. Since then TAXI has increased revenue and income and bought back shares. $16 to $20 would be 'fair' value. This could go higher if they continue to buy back shares at a big discount.
The company is pretty conservative so they are more likely to put in a floor of $11-12. Most likely not $13 unless they get lots of shares off the market -raising book value.
What is much more likely is that the buyback puts in a floor and the market catches on and bids the shares to a more reasonable yield.
If the shorts keep selling cheap and the company buys the earnings growth will accelerate. If the shorts cover and go away the dividend will be rased to 90% of earnings as required by law. Either way TAXI is a BUY!
The only reason they are not raising the dividend is that buybacks are better at todays depressed price. When price gets back in the teens they can hike the dividend to 30+ cents/quarter.
Today the short sellers began to get the message that the weak hands are gone. Despite the down market and low bid there were no sellers! Volume just dryed up! The smart shorts realized the game was up so they tried to cover. The stupid shorts like Donkey dork jumped in to take their place. Now he spends his day posting lies.
1 Insiders might know about earnings (unlikely)
2 insiders might know about a buyback -a bit more likely as it involves lawyers and filings
3 Or it could just be what I have said for a while now -shortsellers are the only ones selling at these low prices so whenever they think they will cover a little -like before a long weekend -the price spikes and we have a mini short squeeze.