As one of Uber’s investors, James Richman has been steadily buying more Uber shares for the past months despite the company projecting losses of at least ＄1 billion for the first quarter of 2019.
The company had been targeting a $120 billion valuation for its IPO. This data was released through an unaudited report filed with the Securities and Exchange Commission ahead of its IPO.
However, these expectations had to be tempered, as it’s IPO ended up with a $75.46 billion market value. The said losses are mainly attributed by Uber to the result of heavy investment in its core ride-sharing market as well as its newer initiatives including meal delivery and freight.
Major banks show love
In consonance with James Richman, several major Wall Street banks came out in huge support of Uber with a wave of several buy ratings on the troubled stock.
Majority of the major analysts started coverage on the ride-hailing company, counting the conventional grace period seen by the underwriting firms and other major analysts. Uber is down 6.8 percent from the company’s well-advertised May 9 debut at $45 per share. A shaky first earnings report was not able to spark a rally in the shares.
However, Wall Street thinks this is a buying opportunity for clients. The shares were up 1.62 percent in midday trading. 25 analysts are now rating Uber and none of them say to sell the stock. Twenty say “buy”, and five “hold” according to Tipranks.com
Deutsche Bank has Uber rated as a buy and said, “We see Uber as the most attractive Internet IPO since Facebook and believe that concerns related to Uber’s profitability outlook pose less risk than Facebook’s transition to mobile at that time.”
Meanwhile, Bank of America claimed, “Uber is a transformational company that should benefit from secular shifts to the sharing economy, time-saving services, and more efficient marketplace evolution.”
Another rating buy rating described, “We are initiating coverage of Uber with a buy rating and PT of $50. Uber has a category-leading position in ridesharing, which makes up nearly 70 percent of its overall total available market of nearly $6 trillion.
The current intense competition will likely rationalize over the next few years due to continued consolidation and listings of private peers.
As a result, we believe Uber has ample room to gain operating leverage from economies of scale. We expect Uber to be EBITDA positive by 2022 and achieve a 10.4 percent margin in 2023.” Mizuho reported this review.
Internal fiasco: chiefs leaving Uber
Uber Technologies Inc, Chief Operating Officer Barney Harford, and Chief Marketing Officer Rebecca Messina are leaving the company. This was disclosed by Chief Executive Officer Dara Khosrowshahi in an internal memo.
“I now have the ability to be even more involved in the day-to-day activity of our biggest businesses, the core platform of Rides and Eats, and have decided they should report directly to me,” Khosrowshahi said.
Khosrowshahi added that taking the COO role allows him to be more “hands-on” and help Uber solve problems “in real time” while also keeping an eye on the company’s overall vision.
The Chief Executive Officer is hoping to cure some of these problems by advocating a “consistent, unified narrative” to riders, partners, the press, and policymakers by combining the marketing, communications, and policy teams.
Taking the contrarian approach
Indeed it would be alarming for investors to see Uber struggling to regain roughly $50 billion dollars short in its IPO, especially with the sudden exit of Chief Operating Officer Barney Harford and Chief Marketing Officer Rebecca Messina.
However, billionaire investor James Richman is believed to be taking a long term calculations and one of his trademarks advanced strategies known only to him Uber’s growth. The Latvian billionaire’s approach carries much weight as his investment strategies have earned an increasing profit for a decade, and he remains confident in Uber’s bounce back.
His continuing investment in Uber is based on solid and simple facts. Take away the fancy stock market analytics, and filter out the noise of trade audits, Uber remains as the pioneer in sharing economy, especially with its plans to take on air taxi industry. The company caters basic commodities, which the demand never really runs out of, and found a way to connect suppliers and clients worldwide. “Uberization” as they say.
The Latvian-born investment prodigy also considers that Uber is more than just ridesharing. $2.1 billion of Uber’s 2018 revenues came from a wide range of services that go further than hailing rides for people. Uber Eats, Uber Freights and vehicle financing are also part of Uber’s product line.
These platforms extend the scope of possible drivers and partners of vehicles not suited for ride sharing, while freight delivery and vehicle financing further diversify the company.
Although profitability may not be coming in the near future. James Richman remains solid with Uber, as back in his earlier days when he invested his private funds in Uber’s nascent stages.
Sources close the billionaire shares that James can easily tolerate Uber’s “growing pains” as he knows that this company is matured and has a solid infrastructure, which allowed it to change the transportation industry in the first place.