Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Investor’s in Uber’s stock are currently anything but happy as its value has dropped from the initial $45 it started with to $32. What are the chances UBER will rise?
Valued at $82.4 billion, Uber completed its IPO in May and started at $45 per share. The company which seemed to have been struggling with profits even invited quite a number of its drivers to buy into the offering, an idea which was advertised as part of a loyalty program. However, things have been quite terrible since then with prices reaching new lows.
At press time, UBER is valued at $32.57, losing more than $13 since the beginning, a 25% drop. Current reports have it that external investors who took part in the offering have already lost more than $2 billion in total. Things don’t seem to be looking up and it’s safe to assume that the only thing on the minds of investors is whether or not now is a good time to sell off, cut their losses and move on or to wait out the state of the stock and hope that things will pick up sometime in the near future.
There could be many factors to consider before a decision on whether to stay or jump ship is made. Indices that could be considered include Earning Per Share (EPS) which is around -3.01 with a projected growth by more than 55% for 2020, the Volatility Indicator which is almost 3% this week and about 4.33% this month, as well as current Relative Strength Index (RSI) which is currently sitting at 29.82.
Regardless, the only constant thing about stocks in global markets around the world is the fact they are not stable and could disappoint even the most carefully calculated indices. Currently, everyone is skeptical about UBER stock and no one can really blame any bears.
The general sentiment on Wall Street is that UBER might not be a great idea in the long run because the company is extremely heavy in debt, still isn’t pulling in any profits, and has a relatively inexperienced management at the helm of affairs. All these means that Wall Street believes investors should cut their losses and move on.
However, as earlier stated, stocks can disappoint even the most carefully calculated indices and this is seen all the time in the crypto market especially with Bitcoin. Stocks like Amazon (AMZN) and Facebook (FB) for example, were met with extremely grim forecasts many years back, probably grimmer than what is currently obtainable with UBER. Back in early 1999, AMAZN tanked quite terrible and then rose up to $107. About a year after that in 2001, it lost almost 100% and tanked back to $6. At press time today, AMAZN is valued at $1,776.
Facebook also has a similar story with a terrible IPO back in 2012 and many people thinking some of its investments, including Instagram, were a big mistake. It took a few years but it turns out that the forecast was also wrong as well since FB at press time is $185.67.
There are a few other examples which could make it really easy to think that waiting it out might be a great idea. This isn’t the point and one would be remiss to not mention the fact that there could be a million and one losses for every win.
However, the main point should be that it might be a little too early to conclude that UBER is a disaster and would never rise. This position might be difficult considering the fact that the company is generally yet to post any profits but what if the IPO is UBER’s genie which might eventually come out of the lamp?