Will Uber's Expansion Plans Bear Fruit?

Chris Lange

Uber Technologies Inc. (NYSE: UBER) is scheduled to release its third-quarter financial results after the markets close on Monday. The consensus estimates call for a net loss of $0.81 per share and $3.69 billion in revenue.

This year has been a hard one for the so-called unicorn IPOs, and Uber has been far from immune from a disappointing post-IPO period. Uber wants to be in many “sharing” parts of the economy beyond ride-hailing. To go way beyond Uber Eats, the company has announced that it has entered into an agreement to acquire majority ownership of Cornershop for online groceries.

While this may bring back memories of Webvan from the past or Instacart today, Cornershop’s online grocery efforts are shown to be in Chile, Mexico, Peru and now in Toronto, Canada. It also sounds as if Cornershop wants to expand into more countries, based on its own quote, and Uber is a company that would want an effort to apply to many geographies rather than just a few.

Cornershop’s press release indicated that the investment is expected to close in early 2020, if granted regulatory approval. After the investment closes, the press release indicated that Cornershop will continue to operate under its current leadership. The board of directors will have a majority of Uber representation.

Excluding Monday’s move, Uber has underperformed the broad markets, with its stock down about 24.5% since the stock came public. However, in the past month, the stock is actually up 5.5%.

A few analysts weighed in on Uber ahead of the report:

  • SunTrust has a Buy rating with a $56 price target.
  • Cowen has a Buy rating with a $60 target price.
  • Guggenheim has a Buy rating and a $40 target.
  • Stifel’s Hold rating comes with a $50 price target.
  • Needham has a Buy rating with a $50 price target.
  • Merrill Lynch rates it at Buy and a $53 price target.
  • Citigroup has a Buy rating with a $45 target price.

Shares of Uber traded down about 2% Monday to $30.77, in a post-IPO range of $28.31 to $47.08. The consensus price target is $48.73.