RiverPark Funds: “Uber Technologies (UBER)’s Stock is Under Pressure”

RiverPark Funds, an investment management company, released its “RiverPark Large Growth Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. The second quarter was extremely difficult for the fund which returned -34%. Year to date, the fund returned -47%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

RiverPark Funds discussed stocks like Uber Technologies, Inc. (NYSE:UBER) in the second quarter investor letter. Headquartered in  San Francisco, California, Uber Technologies, Inc. (NYSE:UBER) is a technology company that provides mobility services. On September 20, 2022, Uber Technologies, Inc. (NYSE:UBER) stock closed at $31.49 per share. One-month return of Uber Technologies, Inc. (NYSE:UBER) was 9.68% and its shares lost 29.82% of their value over the last 52 weeks. Uber Technologies, Inc. (NYSE:UBER) has a market capitalization of $62.348 billion.

Here is what RiverPark Funds specifically said about Uber Technologies, Inc. (NYSE:UBER) in its Q2 2022 investor letter:

“Uber Technologies, Inc. (NYSE:UBER) is a global technology platform that enables the transportation of people and products across cities and countries. The company’s three main business lines are 1) Mobility where the company is the number one or two player in the app-based personal transportation market in 10,000+ cities globally, 2) Delivery- (Uber Eats in the US) home delivery of prepared meals, grocery, liquor, and increasingly general retail products in seven of the top ten GDP markets globally, and 3) Freight- the largest global marketplace for end-to-end freight solutions including one million digitally connected truck drivers. In the company’s most recent quarter, it grew gross bookings 35% year over year, consummated transactions with 115 million unique customers, completed 1.7 billion trips a month, and all three divisions were adjusted EBITDA positive.

At its February 2022 analyst day, Uber outlined financial goals for 2024 that included $5 billion of adjusted EBITDA and roughly $4 billion of free cash flow. Since then, the company has raised near term guidance on faster post-COVID Mobility recovery, raised near term expectations for margin improvement and generally had positive comments on the trajectory of all three business lines. Despite this, the company’s stock has remained under pressure. Taking into account the value of the company’s equity investments in third party delivery and logistics businesses (mostly received when Uber exited markets by selling to a local competitor), Uber’s enterprise value is currently about $37 billion or less than 10x 2024 expected free cash flow. Looking forward, we think Uber trades at less than four times 2027 free cash flow and less than two times our longer-term target for 2030 free cash flow. Using a historical market multiple of 18x 2027 cash EPS of $5.11 yields a stock price in 2026 (4 years hence) of $92, more than four times its current price.”

Uber Technologies, Inc. (NYSE:UBER) is in 8th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 129 hedge fund portfolios held Uber Technologies, Inc. (NYSE:UBER) at the end of the second quarter which was 144 in the previous quarter.

We discussed Uber Technologies, Inc. (NYSE:UBER) in another article and shared stock picks of Roberto Mignone’s Bridger Management. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.

Disclosure: None. This article is originally published at Insider Monkey.