uploads///Uber core business growth

Why Uber Stock Might Struggle in the Short Term


May. 16 2019, Published 3:11 p.m. ET

Uber stock recovered after tanking in its first two sessions

After an abysmal first couple of trading sessions, Uber (UBER) stock bounced back by 7.7% on May 14, reaching $39.96 and a market cap of $67.2 billion as of the end of the day. However, Uber stock is still ~11% below its IPO price.

Investors are wary of the fact that Uber remains miles away from achieving profitability. While it remains the biggest ride-hailing company, it faces stiff competition from its rivals in almost all of the markets in which it operates. While its food delivery business, Uber Eats, is growing quickly worldwide, it’s also facing competition.

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Uber continues to bleed money

The ride-hailing giant lost a whopping $1.8 billion last year, which suggests that it’s still far from profitability—if it can achieve profitability at all. Another problem for the company is that its core ride-hailing unit has been slowing down drastically over the last few quarters, as the graph above shows.

On the bright side, the company’s freight business has huge growth potential, and Uber Eats, which probably has a better margin compared to its ride-hailing business, continues to grow quickly. Uber also now has a huge database from which it can profit in the future.

Uber has an uphill battle ahead of it in terms of achieving profitability, and it’s not doing a good job at convincing Wall Street of its merit at the moment.


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