Uber poised for a 30% surge: Why now is the time to buy or hold?

Uber Technologies, the ride-sharing giant, is up 20% in 2024. However, Trading.biz analyst Rahul Nambiampurath believes it might still have the legs to surge another 30% in the near-to-mid-term.

“Uber has massive potential driven by affluent consumer demand and increased travel and service spending. The optimism is further fuelled by Uber’s ability to capitalize on its market dominance and the ongoing recovery in travel and mobility sectors,” mentions Rahul.

Key bullish drivers

Rahul has identified several key drivers for the market optimism around UBER. Here are a few in sight:

• Strong Financials: Uber’s revenue reached $10.1 billion in Q1 2024, a 15% year-over-year increase. These numbers were followed by a 21% surge in the number of trips, a 20% rise in gross bookings, and an 82% growth in the adjusted year-on-year EBIDTA numbers.
• Growing Market Presence: Uber operates in over 10,000 cities across 70 countries. The platform has over 149 million active users monthly, followed by 7.1 million active drivers.
• Diversification into Delivery and Freight: Gross bookings grew 18% year over year, reaching $17.7 billion. Uber Freight maintained stable revenue despite challenges, demonstrating resilience in a tough market.

Uber’s robust financial performance, expanding market presence, successful diversification into delivery and freight, positive analyst sentiment, technological advancements, and strong brand position make it a compelling buy or hold. Rahul believes investors can expect significant returns as Uber leverages its strengths to capitalize on growth opportunities.

Is the technical analysis aligned?

Before you delve deeper into UBER’s daily chart, here are a few things to note:

Uber’s stock has shown strong momentum in 2024, with a year-to-date increase of approximately 25%. The stock is trading around $70, up from $56 at the start of the year.

Rahul’s analysis of UBER’s daily chart clearly shows a descending channel pattern. If the stock price breaks above the upper trendline of the descending channel, coinciding with $80 levels, with strong volume, you can expect more aggressive price action. A dip below $62 can invalidate the bullish trend.

A quick rise above 68 can confirm a short-term upmove based on how the RSI indicator is moving. Furthermore, a volume-led move above $80 and then $82.19 can quickly push the prices to $85.5 and $90, resulting in a nearly 30% up move.

Ken Gawrelski, an analyst at Wells Fargo, is validating Rahul’s analysis. Gawrelski has a “Buy” rating on UBER and a potential price target of $89.

Most analysts see significant potential upside for Uber’s stock, with price targets ranging from $84.47 to $100.