We first warned investors about Uber’s (NYSE:UBER) unrealistic valuation before its IPO in April 2019: “Uber’s IPO Valuation Makes No Sense.” After an underwhelming IPO and its firsts earnings report as a public company, we warned again in “Uber Gives Investors the Worst of Both Worlds.” Now, with the stock trading well below its IPO price, and the firm feeling the brunt of the COVID-19 shutdowns across the world, some investors may think there is value in Uber. Think again. Uber is this week’s Danger Zone pick.
We think those with fiduciary responsibilities need to consider just how much risk they take by owning UBER at current levels. This report shows investors of all types just how extreme the risk in UBER is based on:
- Recent legislation could break an already weak business model
- Delivery market share is stagnant (excluding acquisitions), and rideshare is falling
- The path to profitability remains