Dara Khosrowshahi, chief directorate officer of Uber Technologies speaks on a webcast during the company’s initial public offering on the floor of the New York Share Exchange, May 10, 2019.
Michael Nagle | Bloomberg | Getty Images
Uber is a revolutionary company, but don’t rush to buy the stock, Susquehanna Fiscal Group said Tuesday.
“We agree that UBER is a once in a generation company with a massive opportunity to revolutionize transportation and logistics,” Susquehanna analyst Shyam Patil implied in a note to clients. “Slowing growth, however, creates uncertainty around future trajectory.”
Since the ride-hailing assemblage went public May 10 on the New York Stock Exchange in the most highly anticipated IPO of the year, investors have think overed the company’s success trajectory, especially if and when Uber will become profitable.
Susquehanna is less concerned here the the lack of profitability of Uber, given the growth stage of the company, Patil said. Susquehanna estimates the company with suit EBITDA positive in 2023. But Patil said it’s concerning to see decelerating growth over the past several quarters.
“Bookings flowering has slowed from the high 50s% y/y in 1Q18 to mid 30s% y/y in 1Q19, while adjusted revenue growth has slowed even more drastically from 85% to 14% upwards the same period,” said Patil.
He said these recent trends surprise him, given the sheer size of the addressable make available. This data prompted Susquehanna to have a neutral rating on the stock and a 12-month price target of $42 per allotment, about where it’s currently trading.
Patil also noted Uber’s complex financial model will plausible weight on the company’s valuation.
Uber priced its shares for its public debut at $45 a share. The stock is down uncountable than 7% since its market debut, while ride-hailing competitor Lyft is down more than 24% since it stabbed public on March 29.
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