When the markets get jittery, opportunities arise. This appears to be the case with ride-share facilitator Uber Technologies (NYSE:UBER) as investors have become skittish about UBER stock lately.
Is it just a general rotation out of gig-worker businesses? That’s probably a factor, as there have been headlines detailing the tug-of-war between regulators and companies that hire freelancers.
Without a doubt, UBER stock traders should be aware of the latest developments. On the other hand, you don’t want to lose sleep over every news item – you might get “analysis paralysis.”
And speaking of analysis, there’s actually a prominent Wall Street expert who’s feeling very bullish at the moment. In light of this, the worry warts should be able to stay calm and stay invested.
A Closer Look at UBER Stock
Is it a coincidence, or a conspiracy? I’ll let you decide for yourself, but it’s certainly interesting that UBER stock ran up to $60 not just once, but three different times.
This happened in February, March and April of 2021. After that, it was all downhill for the shareholders.
In July, UBER stock broke below the crucial $50 level. By mid-September, it was under $40 per share.
Clearly, the momentum is to the downside – but contrarian investors shouldn’t mind too much. Really, they’ve been given a chance to rewind the clock and buy the shares at a good price.
If you choose to purchase UBER stock, though, I have a recommendation. It’s not a terrible idea to take profits if and when the stock gets back to $60.
That price point provided strong resistance in the past. Besides, as the old saying goes, you won’t lose money by taking profits.
The Gig Worker Drama
California, it seems, has been a battleground for the ongoing tug-of-war between Uber and local regulators/legislators/judges.
As you may recall, in November of last year, a California ballot measure called Proposition 22 passed.
With that, Uber and other ride-hailing/delivery platforms in the state didn’t have to classify their drivers as full-time employees.
Thus, since Uber’s drivers would be gig workers, the company wouldn’t have to provide them with benefits such as overtime pay, workers’ compensation, a minimum wage and the ability to unionize.
However, Alameda County Superior Court Judge Frank Roesch recently struck down Proposition 22.
Uber reportedly intends to appeal this ruling, which took place on Aug. 20. Still, some investors might have freaked out and panic-sold their shares.
Maybe they’re worried about a gig-worker exodus.
Moreover, “Uber has tried to combat the cost crunch by expanding ‘surge pricing,’ but that is causing riders to quit the service in its best markets.”
Keep on Trucking
While duly noting the friction between the company and its workers, value hunters need not dump their UBER stock shares in haste.
As with other regulatory soap operas, investors can stay informed while also adopting a “this, too, shall pass” attitude.
At the same time, the shareholders can spend less time focusing on the regulatory risks, and more on the growth potential of the company’s business segments.
These include Uber Eats as well as the trucking-focused Uber Freight.
And apparently, Morgan Stanley’s transportation research team, headed by Ravi Shanker, is assigning a hefty premium to Uber Freight in particular.
They’ve valued Uber Freight at $3.5 billion, and envision the the total available market (TAM) as a $900 billion opportunity.
Furthermore, the segment’s “extensive offering to both carriers (scale advantages, drop solutions and bundling) and suppliers (real-time pricing, tracking, self-serve platform) allows Uber Freight to address over 50% of the US trucking TAM,” according to the Morgan Stanley analysts.
Bearing all of that in mind, the analysts have assigned a highly encouraging price target of $72 on UBER stock.
But again, even if they’re 100% right about that, don’t hesitate to start taking profits along the way, especially when the stock reaches $60.
The Bottom Line
Feel free to follow along with the ongoing gig-worker soap opera, if you want to stay informed.
Just don’t let the constant stream of available information muddle your judgment.
As a company, Uber can still remain profitable in its multiple business segments – and if the Morgan Stanley analysts are right, the share price has room to run, regardless of the drama.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.