If you haven’t used a ride share app by this point, consider yourself in the cultural minority. In most urban areas, ride sharing apps have become exceptionally popular as locals and tourists alike find urban driving (and parking) outside their budget. Though they may not have been the very first ride sharing app, Uber certainly led this trend and shaped the industry into its modern form.
But all that being said, would you ever consider purchasing stock in Uber? That’s a personal decision that you should base squarely upon its core criteria, including its history, product, profit structure, liabilities, and so much more. More importantly, your analysis of Uber should result in a productive understanding of the role the company’s stock can play in your larger portfolio.
Should you find Uber’s biographical information to your liking, you’ll likely be able to snap up some of their publicly traded shares as soon as today. Taken together, Uber may be an excellent stock to add to your portfolio if you are looking to diversify your holdings in the app-based technology market.
Step #1 – Learn About the Company
If you live in or around a city, chances are favorable that you’ve used Uber’s ride-sharing service on at least one occasion. In fact, you may even be a member of the gig economy who drives for Uber. In either case, your prospective investment in Uber should be informed by more than consumer-oriented information. In effect, you’ll need to dig beneath the surface and inform yourself on some of Uber’s critical biographical information.
At its core, Uber Technologies, Inc, is a technology-centered transportation company that has grown up to foster its core product, the ride-sharing app, Uber. This app relies on a peer-to-peer mechanic that allows “freelance” drivers to join the service and connect with prospective riders directly through the app. The Uber app then facilitates the rider’s digital payment, as well as provides several channels for providing feedback to their driver. As of 2019, the Uber app maintains around 110 million users around the world, with the app’s service area growing to new countries each year.
Uber has branched out in recent years to better leverage their massive market share in the so-called “sharing economy.” Among these services is UberEats, another app that allows for specialized food delivery for a modest fee using a similar peer-to-peer network. Uber has also branched out into rentable scooters and bikes, which are available in numerous cities in the US.
Uber was conceived of back in 2009 by co-founders Garrett Camp and Travis Kalanick. In an effort to make inner-urban transportation more affordable, Camp and Kalanick launched the first iteration of Uber in San Francisco in 2011. By 2012, Uber had expanded to Chicago and was beginning to compete with local cab services for price and availability.
Midway through 2012, UberX launched, allowing users with non-black, non-luxury vehicles to drive for the service (a system that now makes up the app’s core operation). Prices for “an Uber” dropped soon thereafter, allowing Uber to expand to almost every major US city in the following years. Today, Uber is focused on growing its presence abroad as well as creating new app-based services that center around transportation disparities (such as UberEats).
When it came onto the market, Uber was one of the only alternatives to traditional urban cab services. However, in time, other technologies startups followed in Uber’s mold and launched apps to directly compete with their core service. Lyft is most notable among these competitors, as they presently hold the second largest market share – 28% – in the industry (compared to Uber’s ~70% market share).
Also, traditional cab services have served as a direct competitor to Uber since day one. However, Uber has retained an advantage over those services due to their lower prices (for riders) and a lack of need for an expensive “taxi medallion” (for drivers).
Step 2 – Research Financial Standing and Outlook
After accounting for its core biographical information, you’ll be able to further your research into Uber by focusing on its current financial standing and outlook. Specifically, you’ll need identify the several criteria that may affect Uber’s stock performance, such as its profit structure and noteworthy liabilities (including debt). Don’t skimp on this step, though, as these factors are often some of the most influential when it comes to stock’s stability (for Uber or any other publicly-traded tech company).
If you’re in a hurry to invest in Uber stock, consider some of the following questions as you further your understanding of Uber’s financial standing and performance outlook:
- Has the company been profitable recently? If so, to what degree (in dollars)?
- What assets does this company hold? How do those assets compare to their liabilities?
- How does this company make money? What is its business model?
- Who is leading the company? Has their leadership brought stability to the company?
- Who are the business’ largest competitors? How is this company remaining competitive against these rivals?
- Does this company have any upcoming products or services that are expected to make a major impact on consumers?
- Has this company ever been subject to a recent or ongoing controversy that could lead to instability?
In some ways, Uber pioneered its primary method of earning a profit through its core peer-to-peer services. Essentially, Uber takes around 20% of the price of all rides booked through its app as a flat rate. This rate can fluctuate depending on geographic demand, as well as on the type of vehicle requested. Drivers are then paid a portion of the remaining per-ride price, in addition to tips from riders.
Uber has also branched out and gains per-use fees through its other app-based services, including UberEats, UberFrieght, and more. This profit structure has resulted in $11.7 billion in revenue in 2018, a sizable increase from its $7.9 billion in revenue in 2017 (compared to Lyft’s $2.2 billion 2018 revenue).
Debts, Losses, and Major Liabilities
Despite its dominance in the ride-sharing market, Uber has yet to ever turn a profit. This is partially due its heavy internal reinvestment in other tech-centered transportation ventures, as well as the holding of nearly $24 billion in assets in need of constant upkeeping. Rising competition in the ride-sharing industry, as well as pressure from city governments to reform their business practices, has further put a profitability crunch on Uber.
Also, Uber has previously been the subject of harsh criticism, both in journalistic circles and among the general public. Some of this controversy has surrounded the underpaying of its drivers and denying drivers health insurance, leading to further pressure on Uber’s categorization of its drivers as “contractors.” This controversy (as well as others detailed below) may be serious liabilities if public opinion turns strongly against Uber and into the favor of its competitors.
Step 3 – Prepare your Brokerage Account
If the facts align in a desirable manner, you may be positioned to buy at your earliest convenience. To do this, you’ll need to take advantage of a stock brokerage service (either traditional or digitally self-managed). In either case, you should fully ensure that your personal plans align with the stock predictions before committing to a purchase of their shares.
Open a Brokerage Account
Naturally, you’ll need a brokerage account (if you don’t already possess one, that is). These are more accessible than ever, with industry stalwarts and robo-advisors alike competing to bring a new generation of investors into the marketplace. Many of these brokerage platforms offer investment incentives, making it easier to get into the market with minimal initial financial resources.
Our broker of choice is Webull. Why? Because it’s completely FREE! (like Robinhood) But it offers more features including IRA accounts. Also, when you open an account, you will get a Free stock.
A Role in your Invest Plan
Before committing to a purchase of stock, you should certainly have a realistic discussion with yourself to determine if the stock content and outlook matches your personal investment plans. More specifically, you should evaluate whether or not it’ll will help you diversify your portfolio and meet your investment goals.
Should you need it, a brokerage advisor can be a major asset in this step. If you’re new to stock investment in general, then you’ll definitely want to seek professional advice regarding the many ways this stock may affect your investment portfolio. Don’t skimp on this step, either, as it may be the difference between gaining and losing on your first stock purchase.
Now that you have an account, it’s time to Buy!
Finally, the step you’ve been waiting for! Using your platform of choice, you can now purchase a handful of stocks and begin monitoring them for value fluctuations. That being said, not all stocks are precisely the same, requiring a few more particulars to be addressed before completing the stock purchasing process.
Depending on your chosen investment strategy, you’ll need to choose the number of shares to add to your personal portfolio. The total order cost is going to be the number of share x the price of the stock. Example, if a stock is trading at $14.23 and you want to buy 10 shares, then it’ll cost 14.23 x 10 = $142.30
Finally, before finalizing your stock purchase, you’ll need to decide what “order” of stock you’d like to hold. Stock “orders” fall into three primary categories: market, limit, and stop. Market orders are the first and most obvious option for those who want to gain stock and do it quick. That’s because this option immediately executes a stock purchase, regardless of its present market price.
On the other hand, though, you can limit your initial investment cost by putting in a limit order. This allows you to automate a platform to only purchase stock if it floats down beneath a certain value-based threshold. This type of investment order will likely take longer and may not execute at all if the value of the desired stock never dips that low again.
Finally, when you want to further automate your stock purchasing and selling process, you can put in several stop orders. A buy-stop order, for example, can initiate a market order as soon as a stock value dips below a certain optimal value. In the same vein, a sell-stop order is able to sell off your existing stock if it loses a certain amount of value.
You have all the tools and information you need to purchase your next stock. Now it’s up to you whether to take the leap. Happy investing!
P.s. Don’t for get that Webull is FREE and you will get a free stock when you open an account. (For a limited time only)
These days, Uber has been subject to more criticism than complements. Its aforementioned issues with driver pay has only been the tip of the iceberg, it seems. For example, Uber has run afoul of local regulators and law enforcement agencies after its internal data collection tool (known as “Greyball”) come to light in 2014. Uber’s use of “dynamic” pricing has similarly attracted public outcry, especially in the wake natural disasters and civic unrest.
Though he no longer serves as the company’s CEO, former leader and co-founder Travis Kalanick also left a bad taste in the mouths of the public and prospective investors. Kalanick was accused of leading abrasively and ignoring sexual harassment among the company’s employees. Kalanick’s one-time presence on an economic council led by President Donald Trump also gained public ire, especially after Uber broke a cab drivers’ strike following the president’s Muslim immigrant ban.
These controversial issues, and more like them, may make Uber a riskier stock purchase than most seasoned investors are willing to take. However, the company was a pioneer in their industry, and by nature of their innovation can be seen as a strong stock to have. Due to Uber’s tumultuous past, make sure you feel confident in the company’s financial outlook before adding it to your portfolio.