There's more bad news out today (Monday) for the ride-hailing company as Uber President Jeff Jones is quitting.
According to a March 19 Recode report, Jones is quitting because of recent controversies at Uber. These controversies range from sexual harassment claims to Uber using a tool called Greyball to deceive authorities.
Jones reportedly told sources this was not the situation he signed on for as president in late August 2016.
And this resignation is a big deal ahead of the inevitable Uber IPO date...
Why the Resignation of Jeff Jones Is a Major Deal
Uber CEO Travis Kalanick first met Jones in February 2016. According to CNN, within minutes of meeting each other, Jones and Kalanick were debating how Uber could improve its reputation.
Kalanick was eventually able to woo Jones away from Target Corp. (NYSE: TGT), where he was the Chief Marketing Officer.
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According to advertising and marketing industry news provider AdAge.com, Jones helped "catapult" Target's shopper awareness with memorable campaigns.
For example, Target partnered with musical artist Gwen Stefani for her Grammy performance in 2016 to promote her new album. Target's logo was shown sporadically throughout the performance.
Gwen Stefani Partners with Target
Jones also held executive positions at Coca-Cola Co. (NYSE: KO) and Gap Inc. (NYSE: GPS). He was previously the president for marketing and advertising firm McKinney for over six years.
And the fact that someone with so much experience doesn't feel comfortable with Uber's culture and its future doesn't bode well for the next president.
But most importantly, that means your hard-earned dollars could be at risk by investing in the Uber IPO.
Here's why Uber stock will be so risky, along with a better way to profit from the IPO hype...
Why Uber Stock Is a Risky Investment and What to Do Instead
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The scandals are hurting Uber's reputation, but that's not the only concern investors should have.
The biggest reason why Uber stock is a risky investment is because of the new competition from Tesla Inc. (Nasdaq: TSLA) CEO Elon Musk. Tesla's CEO shared his master plan for Tesla on Twitter Inc. (NYSE: TWTR) on July 20.
Musk said he wants to turn Tesla customers' cars into self-driving taxis. He said most cars are only used 5% to 10% each day, and using the car as a taxi could offset loans and lease costs.
Musk also said he could create his own ride-hailing service with his own fleet.
"In cities where demand exceeds the supply of customer-owned cars, Tesla will operate its own fleet, ensuring you can always hail a ride from us no matter where you are," Musk said in his plan.
Tesla's CEO has a clear advantage over Uber, as he owns the technology and the vehicles to make this happen. Uber does not own its vehicles and has to rely on human drivers right now.
To compete with Tesla, Uber will have to sink billions into inventory and technology. For example, Uber opened a research facility to build self-driving cars in February 2015.
While financial terms weren't disclosed, Uber did raise $1.2 billion in December 2014 before the facility was open.
Tesla is better positioned to dominate the ride-hailing market, which is the biggest reason to avoid investing in Uber stock.
However, we still have a better way to play the Uber IPO for investors who really want to own Uber stock...
Money Morning Director of Tech & Venture Capital Research Michael Robinson recommends investors who want to play IPOs look at the First Trust U.S. Equity Opportunities ETF Fund (NYSE: FPX).
FPX mirrors the broader market IPOs, and it also includes some of the top-performing stocks on the market, like Facebook Inc. (Nasdaq: FB).
"With it, you can grab the upside and excitement that IPOs offer - and sidestep all the volatility inherent in new issues. In other words, let the fund managers do all the heavy lifting while you sit back and watch the profits pile up," Robinson said.
There are 102 stocks in its holdings, which provides more diversification and limits the risk of owning just one stock.
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