This analyst thinks Uber’s multiple could double from here

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.

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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

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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:

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

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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.

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

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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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