This analyst thinks Uber’s multiple could double from here

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Nov 26, 2021
  • Mark Mahaney makes a bullish case for Uber on CNBC's "TechCheck".
  • The stock that's down 20% this year is one of his top picks for Q4.
  • Mahaney also sees Meta Platforms as attractive at current valuation.

Ride sharing still has another 40% to go before it recovers completely to the pre-pandemic levels. But Evercore ISI’s Mark Mahaney says the leader of this space, Uber Technologies Inc (NYSE: UBER), is still a fascinating play for long-term shareholders.

Mahaney’s bullish case for Uber Technologies

The timing of Mahaney’s bullish call on Uber is particularly surprising since the broad market is responding today to the fears of a new COVID variant – an adversary of the reopening trades. Defending his stance on CNBC’s “TechCheck”, he said:

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Long-term investors should be stepping in on an asset like Uber where the valuation is really compelling. I think the multiple can double from here; I don’t know when COVID lets up, but when it does, here’s a great recovery play. There’s a lot of profits to come from Uber when the recovery occurs.

On the flip side, Uber’s food delivery business is a pandemic play, which might not be sufficient to offset the hit to ride sharing if COVID-19 restrictions are renewed, but is still a positive for the company nonetheless.

Uber turned free cash flow positive in Q3

Uber turned free cash flow positive in its fiscal third quarter that Mahaney sees as a massive achievement considering volumes are still down 40% from 2019 equivalent. The stock that’s down about 20% this year is one of his top picks for the holiday quarter.

Mahaney is also bullish on Meta Platforms Inc. He agreed the company faces several headwinds but reiterated it as a “structural winner”.

I like the stock; the valuation is really compelling. A lot of the overhangs are already priced in. It’s trading at a 25% discount to Google with a similar growth profile. So, if Facebook can address any of the headwinds, there’s a lot of multiple expansion you could see. It’s a very cheap stock.

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