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Uber Finally Gets an Upgrade as Analysts Hope for IPO Recovery

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Uber Stock Market Today

Disruptive companies that changed the world we know had raised record funds in private. But things went south when they went public as there was no unlimited demand to tap into. Their disappointing post-IPO performance made it clear that private investors were too optimistic. And there aren’t many deals likely to go out until the end of the year due to this sentiment. None of that is good news for banks that are the ones who earn big from underwriting these IPOs. But at least for Uber Technologies (NYSE:UBER), things seem to be finally looking up!

From neutral to buy

On Monday, Citigroup upgraded Uber’s rating to “buy” from a “neutral”position. The argument is that Uber Eats is not properly reflected in the current share price and the expectation is that the revenue growth will be reflected in the upcoming third quarter results. However, the price estimate was kept the same, at $45 per share.

A rough start

Uber was valued at $68 billion in the private markets but its stock has dropped 34% since its IPO in May, leaving the company far behind where it was valued pre-IPO. Moreover, Uber suffered a $5.2 billion loss in its latest quarter due to billions in IPO incurred costs. And more importantly, Uber posted a $4.72 per share loss for its fiscal second quarter in June. Its poor revenues grew just 2% from last year however Uber Eats’ revenues rose 72% to $595 million this year and analysts have a lot betting on this segment.

Competitor following the same trajectory

In March, Uber’s main competitor Lyft (NYSE: LYFT) was valued at $24 billion for its IPO debut and this was far above its previous valuation in the private markets that amounted $15 billion. But since then, its stock has fallen 46% as investors grew increasingly worried about the company’s steep losses.

WeWork Postponed

WeWork, its parent We Co., that is, abruptly postponed its highly anticipated IPO on Nasdaq last month, and it isn’t the only company who did so. The decision was taken after prospective investors revolted against the office-sharing company’s governance and significant losses. The New York company and its underwriters anticipated a weak demand and consequently, trimmed about $30 billion away from its expected valuation.

2019 – Expectations Vs reality

Due to governmental pressures, 2019 had its share of unfavourable winds. But surprisingly, markets persisted. There were also successful debuts, such as of Pinterest Inc. (NYSE:PINS). But analysts still find it is unlikely that 2019 will be the record year that many analysts had envisioned. What is traditionally one of the busiest times of the year is now a virtual standstill as many postpone their debut hoping for markets to improve. According to Goldman Sach’s, this year’s IPOs are expected to be the least profitable since the technological big-bang.

The shift from ‘traditional to ‘direct listing’

This still is not only freezing the private-funding market but also pushing companies to rethink their investment strategies in favour of less expensive alternatives. Slack Technologies Inc. (NYSE:WORK) yet another unprofitable company that made its debut in June, used an unusual method called a direct listing. The company didn’t raise capital but simply used $26 as a reference price when its shares started trading. But Slack shares now trade 4% below that reference price, showing the underlying reality: the public market rewards companies that generate cash flows with further revenue growth prospects.

2020 – Possible IPO recovery

When the IPO market does come back to life, more companies are expected to enter the spotlight and most probably through direct listings. Even Airbnb which is set to go public during the first half of 2020, might do so. There’s also the retooled We to look out for. Surely, many companies will do their best to successfully bypass the costly traditional entry to the public market. But it remains to be seen how close can 2019 manage to rise up to its high expectations, with Uber’s quarter results also giving a glimpse of hope for the better.

This article is contributed by IAM Newswire. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com

Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Roku’s Earnings Exhibited Its Leadership Position

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Roku Streaming

Roku (NASDAQ:ROKU) has been given a vote of confidence a day ahead of its earnings many analysts were expecting impressive third quarter earnings. But, unlike its past seven earnings report which exhibited a blowout growth exceeding estimates, Roku’s third quarter earnings results had beat Wall Street’s expectations but still causing its stock to drop 16% in trading to close at $118.46 a share while now climbing back to $130.

Expectations Vs. Reality

Prior to its earnings report, Rosenblatt raised its price target on Roku to $159 from $134, estimating that the third-quarter earnings and guidance are set to outperform expectations. And revenue did continue soaring both on absolute as well as per-user basis.
But, Roku ended up reporting a loss of 22 cents a share, compared to 9 cents in the year-ago quarter. And along with its mixed third quarter results, investors were further discouraged by Roku’s disappointing fourth quarter guidance with a decreased outlook on profitability due to a recent acquisition and operational costs of international growth.

Overall, on October 30th, Roku announced what seemed all positive results and better than-expected third quarter revenues. Active accounts increased by 1.7 million users with the company beating revenue estimates, achieving a growth of 50% year-over-year resulting to $260.9 million. Roku even increased its revenue estimates for the fourth quarter to $396 million and to $1.11 billion for the full 2019 fiscal year, but investors seemed to focus only on the net loss.

Competition is getting fired up – but is this really a threat to Roku?

Comcast (NASDAQ:CMCSA) has launched its Xfinity Flex streaming box with Martin Luther King Jr.’s daughter accusing the company of trying to “dismantle” the Civil Rights Act of 1866, as the company heads to US Supreme court, among many other regulatory pressures calling for the company to be broken up by US Rep. Bobby Rush (D—Ill.).

Facebook (NASDAQ:FB) launched its Portal TV streaming device along with an experimental news content section to prevent its users going to other news sites. For years now, the company has been quietly changing its algorithms and enhancing its content, up to the point of ‘cloning’ Snap Inc’s (NYSE:SNAP) Snapchat’s features to appeal to the Generation Z users.

Apple’s (NASDAQ:AAPL) up and coming services have enabled the company to hit an all-time-high with a revenue of record $64 billion, despite a slump in its iPhone sales which were always the main trigger behind its revenues. So, Apple’s strategy of shifting away from hardware to subscription services definitely seems to be working. Moreover, Roku just announced that its updated mobile app can work on the Apple Watch, turning it into a device capable of much more than just switching channels.

The Walt Disney Company’s (NYSE:DIS) Disney+ is available on both Roku streaming devices and Roku TV so family-friendly content in the form of hundreds of films and thousands of TV episodes not just from Disney but also from Marvel, Star Wars, Pixar, National Geographic will all be available to Roku users.

So overall, Roku is on the winning side as a distributor since it gets revenue from Apple as well as Disney and Netflix (NASDAQ:NFLX). And it is no wonder many analysts believe that Roku will continue benefiting materially from all this competitive activity and perhaps even outperform its fourth quarter guidance. Comparing to Netflix’s most expensive streaming package, Roku’s average revenue per user over the trailing 12 months is 40% higher. Moreover, current trends indicate there’s still plenty of upside left for Roku to further boost its performance.
Overall, Roku remains on its enviable throne being a top distributor and growing with its ‘so-called’ competitors. Roku still has a unique position on the market thanks to its unique business model – a rare one where everyone wins.

Outlook

Many analysts expect that it will be challenging for Roku to make a profit in the upcoming few years due to the company’s costly international expansion during which it will also have to compete for TV licensing contracts. But, Roku has positioned itself to be a key benefactor of the shift from traditional TV to streaming. And just like the previous time its stock dropped due to unnecessary panic, many analysts and investor still seem blindsided to the fact that this is one rare company that is flourishing in a relatively safe position despite the storm around it. So, Wall Street’s post-earnings reaction seems to be purely based on the company’s reduced outlook on profitability as the company targeted an adjusted EBITDA of $30 million for the fiscal year despite the $35 million expected. And considering this decision was taken as the company will be focused on investing in sustained growth, this does not seem as a sign of an underlying problem, especially since its stock has soared almost 400% since January, and ended this quarter with an even improved Q4 revenue outlook. Roku’s platform business which grew by more than half is just one of its strengths that will enable the company not just to survive the streaming wars but to emerge as one of the key providers of the future of television.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com
Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

The Growing Specialty Car Equipment Industry Brings Unlimited Opportunities

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Ford News

There are 225 million licensed drivers in the U.S with 85% of total adults. And they drive 278.1 million vehicles, made of 158.6 million light trucks and 119.5 million passenger cars that are on the road. The vast majority of the 278 million vehicles are less than 20 years old. Despite the fact that there is a constant flux in the ownership of cars and trucks, currently, the number of cars coming on to the road outpaces those being retired. This expanding vehicle population offers more opportunity for the aftermarket- the industry of specialty car equipment.

Future trend

Over the next few years, passenger car sales are expected to drop whereas demand for light trucks is expected to increase as the growth in CUVs is coming largely at the expense of traditional car sales. By 2025, SEMA projects that light trucks that include: pickups, SUVs, CUVs and vans, will represent 69% of all light vehicles sold. And if gas prices and the economy don’t become limiting factors, light truck sales are expected to continue outpacing passenger cars.

While accessorizing can occur anytime during a car’s lifecycle, most modifiers tend to upgrade their vehicles within the first few months of purchasing their vehicle, whether it is new or used. But vehicle preferences are changing and so is this overall landscape with 27% of drivers purchasing specialty-equipment parts each year with 34.9 million households accessorizing their vehicles also on a yearly basis.
Overall, the specialty-equipment market has been growing about 5% per year, reaching a new high of nearly $45 billion in 2018 and it is expected to continue unless prevented by a weakening macroeconomy.

Electrification

Despite the increasing interest for this trend that will shape the future, electric vehicles comprise less than 1% of light vehicles on the road whereas hybrids are now the only alternative to have a notable share of registrations. So, it will take some time to change the landscape of the U.S. light vehicle fleet.

Opportunities exist across vehicle segments

Pickups remain the largest segment for the industry and besides being a versatile platform for accesorization, they are the most common segment on the road and are expected to sell well in the future. CUVs are an emerging opportunity with a lot of them on the road and their popularity growing further, and supposedly they will be accessorized similar to SUVs. But despite the growth of CUVs, full-size pickups remain the most common vehicle subtype on the road. In 2018, pickups are what drove the most sales in the specialized equipment sector.

Tops vehicles for accesorization – pickups

Based on its opportunity scores, full-size pickups top the overall list as they are the perfect platform for accessorization, both in terms of utility enhancement as well as ‘enthusiastic’ additions.

General Motors (NYSE:GM) is taking first place with its full-size pickup with 17.6 million vehicles in operation. GM is the fourth major company who left the Plastics Industry Association this year possibly due to pressuring environmental policies although they didn’t disclose the reason why they didn’t renew their membership. The company just unveiled its electric pickup with two BOLT EV batteries. Their Chevrolet E-10 Concept combines vintage style with the futuristic technology needed to achieve zero-emissions.

The second place is taken by Ford Motor Company (NYSE:F) F series pickup with 15.6 million operating vehicles. Ford has also just revealed a one-off electric Mustang for this week’s annual Specialty Equipment Market, a place where lots of futuristic prototypes are born. With just two weeks until Ford unveils its first mass-market EV, a Mustang-inspired SUV codenamed Mach E, you can imagine where Ford’s multibillion-dollar investment into electric vehicles is headed.

Third place goes to Fiat Chrysler Automobile’s (NYSE:FCAU) RAM who just got patriotic with “built to serve” editions that honor the US Military. Its pickup has 7.6 million operating vehicles on the road.

Fourth place is taken also by FCA’s Jeep Wranger (2.9 million vehicles), followed by Ford’s Mustang (2.2 million), GM’s Chevrolet Tahoe (4 million) and Camaro (1.3 million,), FCA’s Dodge Challenger (529K), GM’s Chevrolet Corvette (814K) and last but not least, Toyota Motor Corporation’s (NYSE:TM) Toyota 4Runner with 1.9 million operating vehicles.

But older cars still represent an important market for the equipment industry and there are some notable differences within their rankings as Bayerische Motoren Werke Aktiengesellschaft’s (OTC:BMWYY) BMW 3 Series with a long history of model generations appears, as well as Chevrolet’s Corvettes make an appearance on that list. Interestingly, it is BMW’s new SUV models that boosted the company’s net profit that increased 11.5 percent from a year ago to $1.72 billion in the third quarter despite increased spending on electric technology. The fact that revenues increased 7.9 percent is great news after the company was quite disrupted in the same period last year due to new emission policies that impacted costs and distorted its supply chain.

Projected sales – optimistic

GM and Ford’s market dominance in the pickup segment is expected to continue with sales of an additional 12 million trucks by 2026, followed by RAM Pickup of 3.7 million. But Toyota’s prospects are looking up with Toyota Tacoma (1.7 million) – 4th place and Toyota Tundra (769K) 6th place, with Chevrolet Colorado at 5th place (1.1 million). Newer pickups from Toyota tend to get the most attention from accessorizers, especially the mid-size Tacoma. With 3.2 million Tacomas on the road today and 2 million Tundras, it is an indication that strong market exists for specialty-equipment markets within the Toyota pickup space. On Tuesday, the company announced significant changes in its North America division, such as establishing the Manufacturing Project Innovation Center and naming new leaders to enable its manufacturing team to better respond to customers’ needs. The Japanese giant plans to invest $13 billion in its U.S. manufacturing plants by 2021.

Ford Ranger (648K) took 7th place, but the list also introduces Nissan Motor Co’s (OTC:NSANY) Frontier (506K). Nissan just unveiled its Ford Ranger Raptor rival, also as a tease for the 2019 SEMA auto exhibition. At the recent Tokyo Motor Show, Nissan executives said the company is working on hybrid technology.

Speaking of hybrid, one of the companies that will surely benefit from this light truck accesorization is Worksport that is owned by Franchise Holdings International Inc. (OTC: FNHI). The company which is one of the fastest growing manufacturers of truck bed covers in the US, just won its third U.S. Patent for innovative and affordable truck bed cover system, surely a monetizable development for the company. The patented hybrid model will be officially launched later this year. The company also launched a new website in its effort to become synonymous with the experience of driving a pick-up truck. Worksport was launched with a mission to create a brand-new market for all those truck drivers who weren’t satisfied with the available market offerings and not only did they succeed in creating that segment, but they have quite a perspective for future growth!
Bright future for pickups- even brighter for specialized equipment!

The conclusion is that consumer demand for pickups is expected to continue well in the future, so they should remain highly accessorized platforms. Yet, as large and often more expensive vehicles, trucks can be more susceptible to changes in the economy. So, in case of a weakening economy, consumers may tend to hold on to their older vehicles or switch to more economical options, but this is even better news for specialized equipment industry. But provided consumers feel confident in the current economic environment, both pickup sales and of their accessories will continue to grow. So, either way, specialized equipment for light trucks has a bright future ahead!

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com
Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Uber’s Losses Keep Accumulating Yet Positive CEO Expects Profitability in Two Years

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Uber Stock News

Uber Technologies (NYSE:UBER) has been through a rough patch since its IPO in May as the company lost a third of its value since then. Now, the company reported its third quarter earnings which show it is continuing its losing streak, causing its stock to go down nearly 7% following the report. With its main competitor Lyft (NASDAQ:LYFT) facing the same struggle, the company has a goal to achieve profitability for the full 2021 fiscal year.

Third quarter earnings

On the bright side, the ride-hailing giant picked up its revenue growth as it increased 30% comparing to the same period last year, achieving $3.81 billion, topping expectation of $3.63 billion by analysts polled by Fact Set. Uber convinced more consumers to use its range of services as its number of monthly active consumers grew 26% from the same time last year, reaching over 103 million.
But transitioning to its bottom line, the company ended up losing $1.16 billion, continuing its losing streak. And this third-quarter loss also includes $401 million in stock-based compensation due to its initial public offering. However, the per-share loss in the latest quarter of 61 cents a share was better than the analyst expectation of 81 cents per share according to Forbes.

Competition

It’s rival in the US isn’t doing any better, in fact Lyft’s value dropped about 40% since its IPO price. But last week after it reported its third-quarter earnings it managed to beat analyst expectations which many analysts saw as a signal that the company might arrive to positive earnings more quickly than previously expected (but those before interest, tax, depreciation and amortization). Executives at Lyft also expect the company to become profitable in the fourth quarter of 2021. But Lyft is only present in the U.S. and its scope is only about people, whereas Uber gets much more competitors due to its Uber Eats segment like GrubHub (NYSE: GRUB) whose stock just got crushed due to weaker than expected Q3 results, poor forecasts with customers becoming less loyal to a single platform. But Uber Eats’ revenue managed to grow an impressive 64% year-over-year and amounted to $645 million despite being withdrawn from South Korea in September due to pressuring competition which is also present in other countries.

On the other continent, Russia’s Yandex (NASDAQ:YNDX) that is registered in the Netherlands and listed on the U.S. exchange, suffered a 19% drop in its value in one day, wiping $2 billion from its market capitalization. The company reported a strong third quarter earnings that managed to beat estimates as revenues increased 39% over the quarter and expecting them to grow 36-38% more than last year, making it already a profitable division eight years after its inception.

Yet this wasn’t enough to prevent shares from slipping back due to underlying concerns as investors find that the company is vulnerable to potential developments in Kremlin and specifically, regulating the tech sector and limiting foreign power in IT companies.
Meanwhile, France’s Kapten is already the second-largest ride hailing app in London only 6 months after entering the market, with 700,000 customers serviced and 17,000 drivers – setting an ambitious target to double the number of customers over the next year in a market that is twice the size of Paris, with the company’s aim being to eventually move to an all-electric fleet.

Outlook

The-ride hailing pioneer will continue investing in growth and enhancement of its businesses, with Uber Eats surely being one of those domains. But Both Uber and Lyft are facing potentially higher costs for paying drivers due to a new law in California requiring them to classify their drivers as employees. And if their drivers are entitled to a minimum wage and benefits, this could be a cost that can ultimately break these already struggling companies. And Uber already laid off 2% of its workforce since July on the path to cut its losses with the company facing fierce competition in each segment and every country it operates in. In an attempt to get exempt from the new law, the two companies proposed a ballot initiative. But the main problem remains in the unsustainable business model as self-driving cars despite being ‘in the cards’ are surely not ‘just around the corner’, time-wise.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com
Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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