By CCN.com: BITG’s Managing Director Walter Piecyk has attached a bullish buy rating and $80 price target to Uber’s stock. Uber’s quiet period has ended, in response to which Wall Street analysts are expected to flood the market with research. BITG’s Piecyk expects the company to introduce autonomous vehicles in the next half-decade, jumpstarting revenue and overshadowing rival Tesla in the process. The only thing that can get in the way is if the ridesharing company gets beat to the punch by the competition, aka Tesla. In an interview with CNBC, Piecyk said:
“If Elon delivers on his 1 million Uber taxis next year, that’s going to be a problem for Uber and Lyft. But we don’t believe that at all.”
Despite all the cash-burn, he believes Uber and Lyft will be able to justify their valuations by succeeding in this vital area:
“We believe both companies can deliver profitability on what is effectively a taxi/chauffeur-replacement service…We believe the reason investors should own these stocks over the long-term will be the role that both can play in an autonomous future.”
Unfortunately for Uber, much like Tesla, they are burning through cash like crazy. In fact, Mark May at Citi Research believes ambiguity surrounding competition and regulation remains a key threat to Uber’s profit potential. May is cited in MarketWatch as saying:
“While Uber management is optimistic about the U.S. competitive landscape, management seems less certain about the situation in LatAm, where Didi’s 99 does not have the same public-company pressures (note that we estimate that LatAm is Uber’s second-largest rides region at ~21% of ride’s gross bookings).”
While Uber wants to operate a fleet of autonomous taxis, Musk wants your personal car to be able to earn for you while you are doing something else. Unfortunately, rather than drive upside for Tesla shares, analysts at Citi believe Musk’s claims have hurt the company,
“ We appreciate the culture of aiming high (which might also attract talent), [but] the full-mobility claims may have masked a more attainable path for Tesla’s driverless cars. We continue to view the opportunity as real & large, but Tesla needs a more tailored AV network deployment plan.”
Clearly, no one anticipates that Elon Musk can have his army of robotaxis up and running by next year. In fact, some are skeptical that it could be decades before fully self-driving cars are ready. If Uber is relying on this business to achieve profitability, it could be a long and painful wait for investors. Given that Tesla sees it more as a side-business, they may be distracted by scaling manufacturing in the near term.
You have to give the edge to Uber because autonomy is likely to be their core business. A greater focus on self-driving may allow them to beat Tesla to market. Prove us wrong, Elon.
Last modified: September 23, 2020 12:46 PM