After a sharp technical unwind on Wednesday, Uber rallied over +38% on Thursday after demonstrating on an investor call the resilience of its business model to coronavirus-driven slowdowns.
The 4 key takeaways:
Uber has raised debt on relatively lax terms with no maturities until 2023.
What’s not very well-appreciated is that two-thirds of Uber’s cost structure is variable.
As a result, the Rides business can likely withstand an 80% drawdown in bookings and still break even on an EBITDA basis.
Eats is seeing a 10x increase in restaurant signups since just last week, potentially helping offset some of the decline seen in Rides.
And most importantly…
Management believes that Uber can withstand even the most dramatic, “extreme edge case” scenario (assuming an 80% decline in rides and no recovery).
In that environment, it would still end the year with $4 billion in cash plus a fully untapped $2 billion credit line, placing it in a superb financial position.
Learn with titan
Become the smartest investor you've ever been through straightforward, easy-to-read investment articles.
Refer to Titan's Program Brochure for more information. Certain investments are not suitable for all investors. Before investing, consider your investment objectives and Titan’s fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. The introducing Broker Dealer is Titan Global Technologies LLC, a registered broker-dealer and member FINRA/SIPC. Brokerage services are provided to Titan Clients by Apex Clearing, an SEC registered broker-dealer and member FINRA/SIPC. For more information, see our disclosures. Contact: 508 LaGuardia Place NY, NY 10012. Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice. Check the background of these firms on FINRA's BrokerCheck.
© Copyright 2022 Titan Global Capital Management, Inc. All Rights Reserved.