Why I Almost Bought $5,000 Worth Of Uber Stock Today...But Didn't
Application form to apply & try and get in my Private Stock Group/Financial Fortress
Today I almost ended up buying $5,000 worth of Uber stock as a long-term investment of mine in the stock market but decided not to… I want to explain why I didn’t buy Uber stock after their earnings last night.
Want to join our free STOCKHUB discord chat? Here is the link
This is where you can chat for free with other investors in the stock market about individual stocks or things going on in the market. Enjoy!
*My Instagram is : FinancialEducationJeremy
This is a Jeremy Lefebvre Production
Created by Jeremy Lefebvre
Well guys, I almost done did it. I almost bought the Uber the Uber stock today. Okay, Uber is having a bit of a tough day it stocks down around 7%. Now to be fair, the markets are down in general today, but it’s not like the markets are down 7% certainly, okay, NASDAQ is down about point 8%.
But you have Uber down about 7% here today, and that comes on the back of its earnings basically came out last night and not a lot of investors were honestly liking those Uber numbers. Okay, now I want to go ahead and share with you why I almost almost I was like two clicks away from buying $5,000 worth of Uber stock here today.
Now, it’s pretty common for me to buy anywhere from like $2,000 to $5,000 whenever I initially start a position in a company, and this would be my first time I ever bought Uber stock. So I was thinking about $5,000 worth and I came about two clicks away from doing it.
And then they decided not and I want to share with you why I decided not to buy Uber stock ultimately today, and why I believe I’m going to get this stock for a lot cheaper in the future. Okay, but before we get into that, I want to share at least my thoughts on why I actually like Uber as a company and why I think Uber will actually grow into a much bigger company in future years.
Okay, so I hope you guys enjoy this video, as always make sure to smash the thumbs up button. And let me know in the comment section, what your thoughts are around Uber stock, I would love to hear from you guys, as always. And by the way, if you want to share your thoughts around Lyft stock, I would love to hear those as well.
Okay. So if we think about Uber, here’s how I’m personally thinking about Uber the business model on what the company is doing. Okay. So you have Uber, which basically runs a needs based business has not going anywhere. If you think about transportation, if you think about ride sharing, and whatnot, those type of things are not going anywhere.
And that is a business model that is essentially really like needs based. I mean, I really saw it in person, when we went out to vacation in San Francisco, I saw you know, when you have these condensed areas like a San Francisco or something like that, like Uber is pretty much a necessity.
I mean, it doesn’t even make sense to try to drive your car around San Francisco and whatnot like Ubers, a must. Okay, so if you’re dealing with any type of big metropolitan area, or you just can’t afford a car in general, like Uber is literally a needs based business.
And I cannot see that business model going away anytime soon, before you had companies like Uber and Lyft, you had obviously the taxi industry. And an Uber is just kind of taken over that industry, they completely disrupted obviously. And so the needs based business that’s not going anywhere, I like those type of businesses.
And then you go ahead and you run that into the fact that though pretty much the number one or number two player, pretty much an all markets across the world. So this means you have this massive business that’s a needs based business, and you have the company that’s the number one or number two player in pretty much all the key markets around the world that you would want to be in.
And so this to me, right off the bat is very, very enticing. I love business models where they’re the number one or number two player in the market. Okay. And if you look at Uber, as far as our market share in many of the most important markets, you would want to look at the actually the number one player in so many markets across the board.
And I love that about this company. Okay, so needs based business number one number two player around the world, and they already scaled their business, which essentially makes competition trying to come in almost a keyword is almost impossible. Okay? If you’re gonna think about this, okay, who could really compete with Uber?
Could Amazon come in compete with Uber? No. Could Facebook could Apple could Google? No, you could make somewhat of an argument with Google with with with way Moe down the road, maybe they’re a potential competitor, we’ll have to see all that shakes out.
But in then if you think about like the venture capital space, let’s say there’s a venture capital company, they want to put $100 million into a project and compete with somebody like Uber and try to disrupt them and come in that space, right?
It’s going to be really, really difficult in pretty much impossible, because Ubers already scaled at this point in time. So how are you going to be Uber in this situation, you’d have to try to undercut their pricing to try to get consumers on that. But if you undercut their pricing, then you’re still gonna have to pay the drivers just as much as they would make on Uber or Lyft.
If not more, right to attract those drivers, which means your losses would be out of this world, okay? I mean, Uber and Lyft, they already lose a ton of money. Now imagine if a company tried to come in and undercut their pricing, but they still have to pay the drivers just as much, if not more, okay, it’s an impossible, it’s an impossible competition.
There’s only one company in the entire world that I can pretty much see actually having a legit shot, okay, the key word is shot at actually disrupting Uber and that is Tesla, they were the only ones in the entire world that could actually disrupt Uber if they want to, with what they’re doing with self driving the fact that there’s a likelihood that Tesla could have full self driving vehicles on the roads within two years.
And then if they could get government to basically allow those self driving vehicles to be taxis and things like that. Tesla’s really the only one that has a chance, but that is still a very hard thing for Tesla to pull off, okay. So when you kind of think about this new thing about cars, Competition, there’s almost no competition that can exist for Uber here in the short term, or even if you’re looking out over the long term.
Okay, it’s, it’s almost impossible, there’s really only one company, I can see it. So you’re looking at a player, that’s pretty much almost guaranteed to be the number one or number two player in all these markets for a long, long time into the future.
Okay, that is obviously a very exciting opportunity. Okay, then there. Uber Eats business, which is a very, very fast growing business, obviously, that’s food delivery. And so you’re at your house and you want to place a food order. And basically you don’t have a car to go get it or you just don’t feel like getting it, you just want the food delivered to your house.
There are more and more restaurants constantly coming on to Uber Eats up, basically, you can order from the food will get delivered to your house, okay, in my opinion, they should be the number one or number two player in food delivery. If you’re looking at a long term basis, I think this will be very clear to see within about a year to a year and a half.
I think as of right now, there’s so much competition in delivery, it’s not really clear, like how many companies are going to make it Are there going to be four players in this space. And they’re going to be one or two players in this space, it’s not really too clear on who the for sure companies will be.
But I can almost guarantee you that Uber Eats will be one of those first shark companies with their scale with their brand and things like that, I really just can’t see them not being the number one and number two player, their competition obviously is doordash grubhub, post mates, caviar, but caviar really competes on more like the higher end restaurants and things like that.
So there’s definitely several competitors, along with smaller competitors in these different markets. But if I look at it, the scale and the funding, Uber has to make Uber Eats work, I honestly think Uber Eats will be the number one number two biggest player in that market.
And that’s gonna be a massive, massive market going into future years, okay, by the way, it’ll be very clear to see who are the actual winners within a year, a year and a half. And then from there, likely, the winners will stay the winners in that space.
Okay? This is going to be an extremely, extremely profitable company, in my opinion, if you look on a long term basis, looking out three years, five years, seven years from now. And the reason being is is a monopolized type industry. Okay, that is needs based. And when you have like a monopoly on an industry, guess what you can do with pricing over time, you can have it go up and up and up.
And so if you look at Uber in the past, okay, and you look at Uber since the service started and whatnot, they’ve had to compete, because they had tons of competitors coming in this space, and everybody wanted a piece of the pie. And everybody wanted to be where Uber is now.
Okay, so to get to this place, they’ve had to keep prices as low as possible for rides, and all those sorts of things. Okay, but now they’ve gotten to a place where it’s pretty much impossible to compete with them if you’re a new entrant into this space. And so if you’re looking on a longer term basis, as the company continues to scale bigger and bigger and bigger, guess what’s going to happen, the price of rides are going to go up more and more.
But meanwhile, most competition won’t even be able to enter the market. So there’s nothing that can really happen there. And so what ends up happening, all that money starts to flow down to the bottom line. So if you’re looking at a longer term basis, this will actually be a very profitable company.
And this is why Uber can probably get to a place at some point in time where it’s got a market cap in the hundreds of billions of dollars versus a market cap today, about 66 billion or so. Okay, so that’s exciting from a long term perspective.
Also, they do have their Uber freight business, which has, you know, big potential in the freight industry. Okay. So needless to say, I actually really like a lot of what’s going on with Uber, I like their current management team that they have in there, I think they’re actually doing a very good job trying to run this big massive business essentially.
Okay. I love the fact that they raised a ton of money, obviously, in the IPO, and they have a lot of cash now on their balance sheet. So you know, we’re looking at all this I’m definitely very excited. And this is what made me think, Hey, man, the stock is, you know, $5 or whatever underwear IPO that maybe it’s worth me going ahead and starting a position in the stock and starting to build a building more and more overcoming months, okay.
But ultimately, I decided not to buy this stock and let me share exactly why I decided not to buy the stock here today. Okay. So when it came down to is essentially in November, in November, so only a few months away, okay, we’re in August now.
Then you have September, then you have October, and then you have November for those who might not know the calendar. But November, what happens in November, a big IPO lockup happens. So essentially, a ton of the early investors and executives of Uber will be able to start legally selling their shares on the market and they’re going to be able to dump out of those shares.
Now keep in mind, a ton of these investors are up millions of dollars 10s of millions, hundreds of millions or billions of dollars on their shares. Okay, so meaning they don’t honestly freaking care if Ubers at $40 a share or $42 a share or $37 a share or $35 a share.
So a lot of those investors that will likely sell out when the November expiration comes a lot of them honestly don’t care about price okay? There’s they’re planning on selling don’t matter what because they’ve already made so much money. On this talk, they just want to hit home, okay.
They just want to get those shares out, maybe they don’t want to sell all their shares, but they at least want to get a portion of their wealth out of this company to go out and buy fancy homes and fancy cars with and go on crazy vacations, or just put into the bank or invest in the next Uber or something like that.
Right? Those individuals they want to do that they don’t necessarily want to stay all in this stock, which there are tons of old executives at that company or current executives, or you know, early day investors that honestly have a ton of their wealth tied up in this one company, they want to look to diversify.
Okay. So when I’m looking at that, when I think about a lockup expiration, I think about a couple of things, okay. One is Wall Street noses, and Wall Street’s probably going to worry about this a lot over the coming months in Wall Street’s worrying about this a lot over the coming months, and you could continue to see selling pressure on Uber stock as we get closer and closer to that lockup expiration, okay?
Also, then when November actually hits in, they can actually sell their shares these early investors and these old executives of the company, then if they can actually sell their shares, you could be looking at stock that goes down faster and faster and faster.
And this is why a lot of IPOs will go down more and more and more like three months, six months, nine months down the road after an IPO happen, because all sudden you have the lock up, then all of a sudden, in 2020, you have a second lock up expiration, okay? So it means more and more of those early day investors and executives can dump even more shares on the market. Okay.
So if you’re looking at all that, that obviously doesn’t put Uber in the best situation, at least in terms of share price growth in the short term. Now, it is possible that despite all these worries, and despite probably a lot of insider selling come the November expiration, it is possible the stock could go up.
But if I’m thinking about the likelihood that a stock like this goes up with all the worries about the economy, and could we go into recession at some point, and just kind of the move away from a lot of these ultra growth companies, to maybe some more conservative companies, from thinking about all this, I’m thinking Uber shares are probably going lower.
And if I start a position at $40, that’s probably going to be too high, because this is probably going to be a stock that goes into the 30s. And maybe keyword is maybe even potentially the 20s at some point in late 2019 or in 2020 at some point in time. Okay.
And so if I’m thinking about this, I’m thinking, do I need to rush into these shares today at a $66 billion dollar market cap for a company that loses money? Yes, I love so much about this company. But at the end of the day, the fact is, I’m still paying 66 billion for a company that is losing money and will probably continue to for at least a year or two into the future.
And then when they do start to make money, I’ll probably be very, very small profits. Do I absolutely need to rush into this company today with the lockups coming in 20 at the end of 2019, and then moving into 2020. And the answer is no. Okay, I don’t need to rush into this company today.
If I miss out on the opportunity and the stock Halston goes from 40 to 60. Hey, it is what it is we missed out on that opportunity. There are plenty of other great stocks I could put my money in in the short term here that might honestly even do better than Uber long term.
So if I’m looking at it, I’m like, you know what, let’s just slow our roll on this one. Let’s wait to see what happens with those lockups. Let’s wait to see if this stock drops into the low 30s then maybe we’ll start a position in the stock and if it goes into the 20s then we’re going to become very very interested in the stock guy.
So anyways, hope you enjoyed this video. As always, make sure to smash the thumbs up button if you did alright, and let me know your opinion on Uber in the comment section. Thank you for watching, and have a great day.