Asset Watch
Tuesday, December 18, 2024
It’s been a wild ride for Uber recently, as an influx of bad news has battered the stock. From reports of autonomous vehicle competition to General Motors cutting funding, and whispers of deregulation, the negative headlines kept coming for the ridesharing giant.
But is Uber a case where volatility breeds opportunity?
Evercore ISI named Uber one of its top picks for 2025, with a price target of $120. On Dec. 12, Analyst Mark Mahaney wrote:
“The internet sector may still contain 1-2 stocks that can materially re-rate and compound in 2025…. We continue to believe that Uber, as the ultimate ridesharing demand aggregator, will be a net beneficiary of robotaxis.”
So he expects the stock to more than double from the Dec. 13 close.
Because Uber is a highly volatile stock, it’s often prudent to gauge support from a long-term perspective. When isolating the monthly chart, the horizontal white lines highlight how Uber has strong support in the $56 to $60 area.
The latter represents the intramonth highs set during the 2021 bull market, while the former is nearer to the 2021 closing high and the August 2024 ‘flash crash’ low. All in all, short-sellers may look to exit their bearish bets in this zone.
Another solid support anchor is the 20-month moving average. The metric stands near $61 as of the Dec. 13 close, and it’s important to remember that false intramonth breakouts and breakdowns are common.
In other words, with more than two weeks left in December, there is still time for Uber to recoup and close above $61.
If risk management is your top priority, it may be wise to enter a position only if Uber recoups the 20-month MA. A close above $61 would solidify MA support and support from the 2021 intramonth highs, which is a powerful combination.
If you prefer to be aggressive, buying the stock now and positioning in advance for a monthly comeback may be appropriate.