Uber (UBER) has not been in the market's good graces since its debut as a public company, but there are a few things the company can do to change investors' minds on the stock.
Uber stock is down more than 30% from its IPO price of $45 a share, now trading at just below $30. On Monday, Citigroup analysts upgraded the stock to buy from neutral, maintaining their price target of $45. The analysts cited improving fundamentals and an under appreciated Uber Eats business. The company could still be years away from turning a profit, however, as it reported negative operating cash flow of $1.6 billion in just the first half of 2019. Uber has also lost some ride-hailing market share to rival Lyft (LYFT) of late.
More broadly, "Uber has kind of become the standard bearer for the market's distrust of companies that are growing really fast but are also are a long ways from profitability," TheStreet's Tech Editor Nelson Wang said. "And given the overall macro environment right now, investors are in kind of a risk-off perspective." He noted Uber must show improving profitability in order to win back investors' trust.
TheStreet's tech columnist Eric Jhonsa said that "if there are signs of reduced competition or at least better take rates in the food delivery business, which right now has much lower take rates than the ride sharing business, people will be encouraged by that." For the core ridesharing business, many analysts have also touted a rebound in take-rates as a tailwind for all ride-hailing companies.
Bull Market Fantasy: LIVE TUESDAY & THURSDAY @10:45AM
Catch Up: Today's Top News Videos Below