Uber (NYSE:UBER) stock is in the spotlight after CEO Dara Khosrowshahi penned a letter to employees and disclosed an insider buy. In the letter, the CEO stated that the “market is experiencing a seismic shift” and that Uber must act accordingly. Khosrowshahi also wrote that the company must cut down on its spending and treat hiring as a “privilege.”
He also placed an emphasis on achieving profitability on a free cash flow basis. While Uber operates in “multi-trillion dollar markets,” Khosrowshahi noted that the total addressable market (TAM) is irrelevant if Uber is unable to make a profit.
During the first quarter, the ride-hailing and food-delivery company posted a massive loss of $5.9 billion on top of $6.9 billion in revenue.
Khosrowshahi’s purchase of UBER stock comes three days after his letter to employees. Let’s get into the details.
CEO Dara Khosrowshahi Buys UBER Stock
On May 6, Khosrowshahi purchased 200,000 shares of his own company at an average price of $26.72. In total, the purchase amounted to $5.34 million, so this was no small buy. After the transaction, he directly owns 1.42 million shares of Uber. In addition, Khosrowshahi’s purchase was not prearranged and did not utilize a 10b5-1 trading plan. The last time the CEO purchased shares of his company was on Nov. 15. On that day, he purchased 200,000 shares at an average price of $44.92. That tranche of shares is currently sitting on a heavy loss.
Khosrowshahi seems to be confident in his new plan to prioritize free cash flows and cut costs. The fact that he purchased the shares just three days after his letter to employees shows that he is confident in the trajectory of the business.
So, are other insiders bullish on Uber? During the past 12 months, insiders have bought 402,081 shares and sold 609,296 shares. In total, insiders have amounted to a net activity of 207,215 shares sold.
Who Else Is Betting Big on Uber?
Tracking institutional ownership is important, as these large funds provide liquidity and price support. During Q4, 1,192 funds reported owning Uber, an increase of 11% from the prior quarter. Meanwhile, the institutional put/call ratio lies at 0.88. This signifies that more funds own call options against the company than put options. With that in mind, let’s take a look at the five largest shareholders:
- Morgan Stanley (NYSE:MS): 117 million shares or 6.29% ownership.
- Vanguard: 88.39 million shares or 4.75% ownership.
- FMR: 78.44 million shares or 4.22% ownership.
- Softbank Investment Advisers: 73.31 million shares or 3.94% ownership.
- Public Investment Fund (PIF): 72.84 million shares or 3.91% ownership.
On the date of publication, Eddie Pan did not hold (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.