Uber is not worth $64 billion, but Uber does not care

Uber Eats

On Wednesday 06/03/2020, Uber reached Market cap of $63.72 billion. That is almost three times the market cap it had in mid-March. The enterprise value is worth $49.25 billion; an economic measure reflecting the market value of a business or the sum of claims by all claimants, creditors and shareholders. That is a huge $15 billion different in Market cap and enterprise value.

Uber’s CEO Dara Khosrowshahi recently stated that Uber’s global rides business is still down %70 compared to a year ago, but what is pushing the stock. There is an uptrend in stock market that carries everything with it. Unless, there is a downtrend in stocks, Uber will keep going up. Uber has a 1-year beta of 1.5621 while recently it stands at 1.00 and it follows the market direction.

Uber has a short interest of less than % 2.81, which is relatively lower compared with its peers. Another important area to look at it is insider selling. Uber has higher insider selling. Between April 7, 2020 and May 27, 2020, insiders sold worth of $53.1 million shares. Going back, there is only a single purchase by the current CEO worth of $6.7 million last year, but numerous insiders selling.

Stock market is going up, not only because of stimulus package by the FED, but also huge short sellers’ positions for stocks downturn. Uber is also trying to mitigate the loss by increasing focus on its Uber Eats and possibly extending it to grocery and medicine delivery.

Since April 08, 2020, Uber has jumped up over %40 and with current market trend, there is room for that increase until FED revises or terminates quantitative easing in the next scheduled sessions June 10, 2020. There is not much bad news for the Uber in the coming days and the stock has glued itself to the stock market. Take me with you, wherever you go.

Even beyond recovery, due to shift in working from home, the demand for ride sharing will not return to its original level, and it will further delay the path to profitability for Uber and Lyft, but until then Uber has nothing to lose.

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