Uber confirmed it will acquire the food-delivery platform for $2.65 billion in an all-stock transaction that’s expected to close in the first quarter of 2021.
As coronavirus cases ramp up, food delivery platforms have seen a boom in demand. Uber’s management knew the company’s Eats division needed to acquire a competitor to make its business more economical.
With Postmates, that’s exactly what the company is getting. Plus, the stock is reacting favorably.
Let’s look at the charts.
Trading Uber Stock
Shares of Uber bottomed in March, just like the overall market. After stalling at $28 resistance, the stock eventually pushed higher and ran higher by another $10 per share.
After topping out near $38, the stock pulled back. However, we saw a bullish reversal, as prior $28 resistance acted as support. With Monday’s rally, Uber stock is reclaiming the 200-day moving average and trying to reclaim the 20-day and 50-day moving averages as well.
If it can hold above $32.60, it will have reclaimed all three moving averages and it sets the stage for a potential continuation higher.
In short, the Street is viewing Uber’s acquisition positively. A move over $34 is the next hurdle, which will put the June high near $38 back in play.
On the downside, look to see if Uber can hold the 200-day moving average. It cleared this level with enough room where it “should” hold if bulls are truly in control.
Below the 200-day moving average will put the $28 level back on the table. If that ultimately fails as support, shares could embark on a deeper decline.
For now though, watch $34 on the upside and the 200-day moving average on the downside.