|Bid||31.21 x 900|
|Ask||31.30 x 800|
|Day's Range||29.57 - 31.27|
|52 Week Range||14.56 - 68.33|
|Beta (5Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Earnings Date||Aug 05, 2020 - Aug 10, 2020|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||48.44|
The core question facing the food delivery business is simple: Can it ever be profitable? The search for a path to profitability is the obvious driver of the current discussions about a potential acquisition of (GRUB) (GRUB) by (UBER)’ (UBER) food-delivery arm, Uber Eats. Food delivery faces the same competitive dynamic as ride sharing.
Uber (NYSE:UBER) stock rose approximately 11% ahead of its earnings report on May 7. The rally had less to do with the ridesharing company and more to do with competitor LYFT (NASDAQ:LYFT) The company reported first-quarter revenue growth and unveiled its plans to survive the pandemic.Source: vaalaa / Shutterstock.com In reporting its own set of earnings, Uber revealed it lost $2.9 billion in the first quarter, translating to a GAAP loss of $1.70 per share for the period. Analysts were expecting a loss of $1.53 billion in the first quarter or 90 cents per share.On the bright side, CEO Dara Khosrowshahi noted the core ride-hailing business was showing signs of recovery with week-over-week gains in each of the last four weeks. Revenues climbed to $3.54 billion, a 14% increase over the year-ago period, but rides were down 3%.InvestorPlace - Stock Market News, Stock Advice & Trading TipsDespite the disappointing results, Khosrowshahi said he was confident that the company has ample liquidity to survive the effects of the novel coronavirus pandemic. Uber Eats is the company's strong suit in these times; it grew 54% YoY, thanks to the surge in demand for food deliveries. Also, the company is looking to curtail its fixed costs and investments to narrow out its losses as much as possible. * 7 Excellent Penny Stocks Ready to Roar I was quite satisfied that these are all positive developments. Uber has done what it can to make the best of a bad situation. It has been nimble-footed in carrying out some essential spring cleaning, and as the effects of the virus start to dissipate, the markets will reward these efforts. Uber Eats is Growing at a Fantastic PaceAt its 2009 start, Uber's primary purpose was to help people to get from point A to B, essentially creating a new platform for ridesharing. Since then; it has become a multi-billion dollar company, diversifying into several different service areas apart from its core business. One such segment is the food delivery service Uber Eats. It started as a pilot project in 2014 called UberFresh, delivering lunch and dinner from specific restaurants in California. Since then, it has expanded its restaurant selection and operates in several markets around the world. The Uber Eats division has had double-digit revenue growth for the past five years, with a 54% growth in Uber's latest quarter results.However, the segment has had trouble gaining traction in certain regions, particularly India and China. Rather than waste time, energy and money, the company has discontinued its operations in China and sold the Indian Uber Eats operations to Zomato earlier this year.Interestingly, though, Uber announced it is making a play to acquire Grubhub (NYSE:GRUB), which currently has a 30% market share in the food delivery business. With the acquisition, Uber Eats would have 50% of the market share in the food delivery business, 15% bigger than its main competitor, Doordash. Liquidity and Cost CuttingUber and other ride-hailing services have been hit hard by the health crisis, which is why they are looking to preserve the strength of their balance sheets. Currently, Uber's cash equivalents and short-term investments are $9.0 billion, which the company feels is enough to cover its cash burn until there is a significant rebound in demand for its ride-hailing service.Belt-tightening initiatives are already underway, as the company laid off 14% of its workforce in the past couple of months. Uber is also closing around 40% of its Greenlight locations. CEO Khosrowshahi has also agreed to waive his base salary for the rest of 2020. In addition to this, the company has exited eight global markets and has pulled back $150 million in advertising and incentives.It's worth noting that Uber recently landed a contract worth $810 million to provide ride-hailing services to the U.S. federal government, which will run through 2025. All of these initiatives should help shore up the company's balance sheet, leading me to believe the company has sufficient liquidity to weather the storm. About That ValuationMost analysts believe that Uber is currently underpriced and that investors could grab the stock at a bargain. According to Refinitiv, the price target for Uber stock lies somewhere between $55 and $15, with the average at $39.40. Surprisingly, Refinitiv has boosted its Earnings Rating for Uber over the past week from 5 to 7. The average Earnings Rating for its Online Services industry is 6.4, while the S&P 500 index average is 6.5. Additionally, Uber stock trading at a 37% bargain to its 52-week high price at $47.08. Therefore, there is a 21% upside to the stock to its current price of $32.54 per share.Uber's Q1 results are underwhelming. Analysts expect a more challenging second quarter due to negative headwinds and the structure of the company's offerings. However, the company's swift actions in preserving its liquidity and focusing additional resources on its Uber Eats division are likely to pay dividends in the future. Bottomline on Uber StockUber's core ride-hailing business is showing signs of recovery, and with the easing of restrictions across the world, things will only get better. The balance sheet looks strong enough to survive the crisis until the end of the year, but it needs to cut costs wherever it can to give it more breathing space. Furthermore, the acquisition of Grubhub will give it a decisive edge over its competitors in the food delivery business.Considering all this, it should come as no surprise that I am long on Uber stock.As of this writing, Muslim Farooque did not hold a position in any of the securities mentioned above. More From InvestorPlace * Top Stock Picker Reveals His Next 1,000% Winner * America's Richest ZIP Code Holds Shocking Secret * 1 Under-the-Radar 5G Stock to Buy Now * The 1 Stock All Retirees Must Own The post Go Long on Uber Stock Despite Short-Term Headwinds appeared first on InvestorPlace.
Uber Technologies is a global company that is transforming the ride-sharing and meal delivery markets. After a much-hyped debut on May 10, 2019, Uber stock is one of the most watched IPO stocks today, but is Uber a buy right now in the current coronavirus stock market rally? Uber is in the midst of a dramatic turnaround, as the company fights to turn a profit.
Now, Covid-19 could mean the days of discounted Uber and Lyft rides are over for good. With ride-hailing down sharply in the pandemic, promotions have virtually disappeared across the industry since mid-March, Lyft’s chief financial officer, Brian Roberts, said on a May 6 call with investors. “So we’ve said consistently that our strategy is to focus on profitable growth, not growth at all costs,” said Roberts.
The end game, in the opinion of two analyst research notes, is more centralized operations and structure, with less pricey long-term investments.
On Monday, Uber Technologies announced that it would be cutting an additional 3,000 jobs. The company also revealed that it was considering reducing investments in several of its non-core projects, to help focus resources in its ride-hailing and food delivery sectors. The Final Round panel discuss the latest from Uber.
Companies like Lyft and Zillow Group are using convertibles to shore up their balance sheets or simply take advantage of strong investor demand for the hybrid securities.
"The next time you open the app things are going to look a little different for both riders and drivers,” Uber CEO Dara Khosrowshahi said on Wednesday.
Repeated failure to comply with the requirement can lead to account deactivation for both riders and drivers, the executives said. Before starting their work each day, the app will require drivers to take a selfie with a mask, verify that they do not exhibit any coronavirus symptoms, confirm that they have sanitized their vehicles and agree to roll down windows during rides. Uber's Senior Director of Product Management Sachin Kansal said the company was also looking at adding selfie verifications for riders.
Lyft, Inc. (“Lyft”) (LYFT) today announced the pricing of $650 million aggregate principal amount of Convertible Senior Notes due 2025 (the “notes”) in a private offering (the “offering”) to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Lyft also granted the initial purchasers of the notes a 13-day option to purchase up to an additional $97.5 million aggregate principal amount of the notes. The sale of the notes to the initial purchasers is expected to settle on May 15, 2020, subject to customary closing conditions, and is expected to result in approximately $637.5 million in net proceeds to Lyft after deducting the initial purchasers’ discount and estimated offering expenses payable by Lyft (assuming no exercise of the initial purchasers’ option to purchase additional notes).
(Bloomberg) -- Uber Technologies Inc.’s offer to buy Grubhub Inc. antagonized officials in Washington and major U.S. cities, who were already taking steps to limit the fees companies charge restaurants and regulate their treatment of workers. If a deal between the two companies proceeds, analysts said it’s likely to face antitrust scrutiny.David Cicilline, a U.S. representative from Rhode Island who heads the House antitrust subcommittee, said the proposed deal underscores the urgency for a moratorium on most mergers, an idea supported by other Democrats. “Uber is a notoriously predatory company that has long denied its drivers a living wage. Its attempt to acquire Grubhub—which has a history of exploiting local restaurants through deceptive tactics and extortionate fees—marks a new low in pandemic profiteering,” Cicilline said in a statement.In San Francisco and Seattle, officials recently set limits on delivery fees, and Boston, Chicago and Los Angeles are among cities that have mulled similar measures. New York is set to vote Wednesday on restrictions that would bar companies from charging restaurants delivery fees of more than 15% and impose other limits. Such regulations are meant to protect restaurants and customers who are driving a surge in delivery orders while at home during the coronavirus pandemic.“Many small businesses and customers rely on these services, and we’ve seen that the fees, either on restaurants or on customers, can spike to unacceptable levels and without competition there’s less to limit their ability to price gouge,” said Matt Haney, who sits on the San Francisco Board of Supervisors and has criticized Uber for its delivery fees.Uber said it’s focused on driver safety and helping support independent, local restaurants struggling from effects of the virus. “Regulating the commissions that fund our marketplace—particularly during these unprecedented times—would force us to radically alter the way we do business, set a far-reaching precedent in a highly competitive market, and could ultimately hurt those that we’re trying to help the most: customers, small businesses and delivery people,” the company said in a statement.Food delivery tie-ups are complicated. Even before the Covid-19 crisis, many of the operations were unprofitable as they fought for market share. In New York alone, at least a dozen food delivery services compete for customers who are increasingly ordering from multiple platforms. Grubhub, the oldest of the major apps, had been forced to burn cash to play defense against upstarts like DoorDash Inc., the U.S. market leader, and Uber. Investors saw the prospect for consolidation as a way to help limit losses, but inflated private valuations and the risk of antitrust review presented hurdles to dealmaking.Then Covid-19 hit. Uber has had to reassure investors that it has enough cash to survive the year and pushed its goal of making an adjusted profit out to 2021. It also told 3,700 employees that they were losing their jobs, information many of them reportedly received over a Zoom call. Grubhub withdrew its financial guidance last month.Profits are elusive in the food delivery business. Uber’s adjusted revenue for food delivery more than doubled in the first three months of the year, according to the company’s latest financial report. But even with that massive increase in sales, the loss from food delivery actually increased by 1% in the period to $313 million. And that’s before the full brunt of the pandemic took hold in the U.S.Meanwhile, these companies face calls from officials to improve conditions for their gig economy workers. California’s attorney general sued Uber and rival Lyft Inc. last week, alleging they’re in violation of a state law designed to give their workers the benefits of employees. A loss in that case could set an important precedent that increases costs for these companies and raises further questions about their ability to be profitable.Persistent losses in the industry are why mergers seemed likely to many analysts and investors. In March, DoorDash accounted for 42% of the U.S. meal delivery market, according to research firm Second Measure. Grubhub had 28% and Uber 20%. “We’ve long believed that consolidation in online food delivery is inevitable,” Tom White, an analyst at D.A. Davidson, wrote in a note to clients Tuesday.But the current economic conditions increase the likelihood of drawing the attention of antitrust regulators, White wrote, especially “given the impact any deal could have on a restaurant industry that is struggling to survive in the face of the pandemic.”Restaurant advocates also said they were worried about the potential consequences of a deal. “It’s extremely concerning,” said Andrew Rigie, executive director of the NYC Hospitality Alliance, a group that represents restaurants in New York. Grubhub and its Seamless division already dominate the city, Rigie said, “and they use their leverage and market share at the expense of local restaurants.”Bradley Tusk, an early Uber adviser who has since sold his stake in the company, said if the policies cities are considering take hold long term, “it may be that consolidation is the only way to have a couple of market players that can survive at all.” Otherwise, food delivery could end up looking like the costly ride-hailing rivalry between Uber and Lyft, Tusk said. (Tusk also ran the 2009 mayoral campaign of Michael Bloomberg, the owner of Bloomberg’s parent company, Bloomberg LP.) “Uber should have found a way to buy or kill Lyft a lot earlier,” Tusk said. “The unit economics of ride sharing would be a lot easier if they had and I think they’re trying to learn that lesson now with the acquisition of Grubhub.”(Updates with background on worker rights issues in the ninth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The U.S. death toll from the coronavirus that causes COVID-19 climbed above 81,000 on Tuesday, as President Donald Trump, defending his record on testing in the U.S., ended his White House news conference abruptly following an angry exchange with two reporters.
Lyft says it intends to offer $650 million in convertible debt due 2025. It will be convertible into cash, shares of Lyft's common stock or a combination of both.
In this episode of MarketFoolery, Chris Hill chats with Motley Fool analyst Bill Barker about the latest earning releases. They first look at digital transactions and how they are growing as people move away from cash.
Lyft Inc. said Tuesday it plans to offer $650 million in convertible debt due 2025. The notes will be convertible into cash, shares of Lyft common stock or a combination of both, at Lyft's choice. The interest rate and conversion rate will be determined at the offering's pricing. The ride-sharing company said it plans to use a portion of the proceeds from the offering for general corporate purposes, including working capital and expenditures and potential acquisitions. The stock fell 0.5% in premarket trading. It has dropped 35.3% over the past three months through Monday, while shares of rival Uber Technologies Inc. have declined 23.3% and the S&P 500 has lost 13.3%.
Lyft, Inc. (“Lyft”) (LYFT) today announced its intention to offer, subject to market conditions and other factors, $650 million aggregate principal amount of Convertible Senior Notes due 2025 (the “notes”) in a private offering (the “offering”) to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Lyft also expects to grant the initial purchasers of the notes a 13-day option to purchase up to an additional $97.5 million aggregate principal amount of the notes. The notes will be senior, unsecured obligations of Lyft, and interest will be payable semi-annually in arrears.
Hundreds of Uber and Lyft drivers are staging a caravan protest at Uber's San Francisco headquarters to demand Uber comply with gig worker protections law AB-5, pay into the state's unemployment insurance fund and drop the ballot initiative it proposed along with Lyft and DoorDash that aims to keep gig workers classified as independent contractors. "Uber, Lyft and other gig companies are continuing in the same path of abusing and completely taking advantage of workers while putting them at risk," rideshare driver and organizer with Gig Workers Rising Edan Alva told TechCrunch.
An analyst at Stifel lowered his rating on the stock to Hold, noting that near-term risks amid Covid-19 could limit upside for shares.
The number of cases of COVID-19 rose above 4.1 million on Monday, as South Korea reported a new cluster stemming from Seoul’s nightclub district and China reported four new cases in Wuhan, the city believed to be the source of the outbreak late last year.
Lyft shares were cut to hold at Stifel on what the investment firm says is likely to be a "slow and uncertain path to recovery" for ride hailing.