TSLA - Uber: Hold On To This Stock For Potential Double-Digit Returns

2024-06-07 04:22:33 ET

Summary

• Uber's valuation is slightly above industry peers, which trade at a median EV/Sales TTM multiple of 3.2x (vs 3.6x for Uber).
• Uber enjoys a strong Moat due to its size and platform-based business model, which results in a strong network effect and likely deserves a premium versus industry peers.
• There are strong arguments against a potential disruption of Uber's business model through autonomous driving, which will likely lead to higher customer engagement for Uber.
• For investors who keep holding on to the stock at the current market price, I expect a return of >10% over a 5-year holding period, assuming a constant current EV/Sales.
• Given the current downward trajectory of the stock, I recommend waiting for a trend reversal before buying into the stock and therefore initiate a HOLD recommendation.

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Investment Thesis

I initiate coverage on Uber ( UBER ) with a HOLD rating as I find that Uber is fairly valued in line with industry peers at median of 3.2x EV/Sales TTM....

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