Although Uber Technologies (NYSE:UBER) dominates the ride-sharing sector — and ranks among the top players overall in the sharing economy — success usually comes at a price. At some point, the market could correct some of the prior excesses of a fast-rising enterprise. This fear is especially worrisome amid current economic conditions. Still, UBER stock just might turn out to be a surprise winner.
In fairness, it’s easy to appreciate why some investors would be skeptical about the ride-sharing giant. On Tuesday, President Trump’s threatened tariffs went into effect, sparking a trade war with America’s three biggest trading partners. While the administration granted a one-month exemption for U.S. automakers from new tariffs on imports from Mexico and Canada, the message was clear: there’s a new sheriff in town.
Tariffs by themselves don’t impose any ill effect on UBER stock. However, they can easily cause prices to rise — and it’s typically the consumer that ultimately pays for the tariffs. That’s a massive burden, with everyday households already struggling with inflation. As pressures build, consumers may look to trim the fat. Frankly, ride sharing is an easy expense to cut.
At the same time, Uber has become a dominant force, not only in the core ride-sharing business but in other areas of mobility, such as food deliveries. Yes, such services can also face the budgetary axe. However, since the summer of 2021, Uber has only missed revenue expectations for its quarterly reports just once.
Such a positive streak provides confidence in analysts’ forward projections. For fiscal 2025, Wall Street anticipates that Uber will post sales of $50.35 billion, up 14.48% from the prior year. Better yet, that would place the forward sales multiple at just under 3.2X.
For context, at this point last year, UBER stock traded for 4.32X sales. Therefore, it’s quite possible that the equity has some additional room to run.
Interestingly, while the financial backdrop indicates the possibility of continued growth, UBER stock is also signaling an optimistic technical pattern known as the bullish flag.
Now, I’ll be the first to admit that the discipline of technical analysis can sometimes resemble a Rorschach test. However, it’s also fair to point out that certain patterns continue to emerge that foretell either a breakout or a breakdown. Regarding the bullish flag, this pattern follows a common three-step cycle of 1) an initial consolidation, 2) a subsequent period of consolidation and 3) a blowoff move.
Looking at the longer-term chart of UBER stock, the rise in the security between spring 2023 to March 2024 represents the flagpole or the initial rally. My argument is that we’re in the tail end of the flag or consolidation phase. Eventually, we may see the breakout move, which could arrive at any moment.
At the present juncture, analysts’ consensus price target stands at $91.10, implying a 19.1% move from Wednesday’s close. That seems like a realistic target given the valuation relative to forward sales. Also, the bullish flag lends credibility to this price forecast.
