Uber Is Back in the Fast Lane
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Forty Days of Madness on the South Korean Stock Market
The South Korean stock market posted an astonishing rise in the first half of the year, driven largely by the artificial intelligence-related semiconductor boom that benefited both Samsung and SK Hynix. As foreign investors became net sellers, the role of local retail investors has become increasingly prominent in recent times. However, the introduction of leveraged ETFs tracking a single stock further exacerbated the already mounting volatility in South Korea’s stock market. Following a sharp rally, a reversal occurred in mid-June, followed by a significant correction in July. In light of these developments, we examined what might happen next on the South Korean stock market.
The European defense industry could perform well
The European defense sector has come to the forefront in our momentum-based screening list. European companies that stand to benefit from rising defense spending remain the focus of investor attention. Based on our screening, two French companies—Dassault Aviation and Thales—have come into focus. As a manufacturer of Rafale fighter jets and Falcon business jets, Dassault Aviation is a key player in the global aviation industry, while Thales is one of the leading suppliers of defense electronics, radar, communications, and cybersecurity systems. The technical outlook for both stocks has been favorable recently, and significant opportunities may arise based on the technical patterns that have formed. As a result, it may be worth keeping an eye out for long entry opportunities in these stocks in the near future.
Uber is showing a nice breakout from a technical perspective, which is the basis for our trading idea on the stock. We would like to capitalize on favorable short-term momentum, but we are also positive about the company’s fundamentals. Revenue and profits could rise significantly for the company in the coming years, as both the mobility and delivery sectors are structurally growing markets where Uber is a leading player. In addition, the company could be one of the big winners as autonomous taxis become more widespread.
Positive technical outlook
There was strong buying activity in Uber stock yesterday, which could set the price on a long-term upward trajectory. Accumulation days have appeared regularly in recent months and have become increasingly frequent in the last few weeks. Yesterday’s move also broke a minor downtrend line, opening up room for an upward move. The formation of a higher low also reinforces the likelihood of a reversal.
Based on the nearest previous breakout level, the initial upside potential is around the $89–$90 target price. This offers a favorable risk-reward ratio of approximately 2:1. Accordingly, we are opening a long position today at around $74. Risk management is ensured by a stop-loss order placed below the previous low ($66.9), while we set the target price at $89.
It could be a story of structural growth
We added Uber to our Equity Top Pick List back in January, as the company is the world’s leading mobility platform and an increasingly significant player in the delivery market. It recently attracted attention in connection with the potential acquisition of Delivery Hero. Over the next four years, revenue is expected to grow at ~13% CAGR, while net profit could rise at a much higher rate - nearly 25 percent (CAGR). Moreover, the stock is not overvalued, its 12-month forward P/E ratio is currently below 20.
The first-quarter report was strong: the number of trips increased by 20%, gross orders in the delivery business jumped by 28%, and group-level EBITDA rose by 33%. Yesterday (June 24), newsflow laid the groundwork for the stock price increase: Uber partnered with five new U.S. brands, which will become available on the company’s delivery platform, thereby expanding its offerings. As the range of offerings becomes more extensive, this could attract even more new companies to the app in a self-reinforcing cycle, which could provide further growth momentum in the long term.
The Uber One subscription program has reached 50 million members, and these members now account for half of all gross bookings and orders. This is particularly important for delivery services, as the subscription model increases order frequency, improves customer retention, and can reduce customer acquisition costs in the long run.
Advertising revenue could also become an increasingly important source of income. The company launched this business line around 2022, and by 2025 it could reach an annual level of $1.5 billion, representing approximately 60% growth. The large user base, combined with data-driven and targeted advertising, could offer even greater growth potential.
Another key pillar of the investment story is self-driving mobility services. Uber does not develop self-driving technology or manufacture cars; rather, it provides the platform - that is, a global base of more than 200 million active monthly users - and as a result, it needs to invest much less money in this area. Recently, Uber has formed numerous partnerships with various companies and is launching its self-driving service in an increasing number of markets.
The company’s robotaxis are available in several cities in the U.S., but they are also expanding into Europe. According to the latest reports, the technology is being tested in Zurich and Madrid. In addition, it is already possible to ride in a robotaxi in Dubai and Abu Dhabi. In any case, competition will be fierce, as Waymo and Tesla are serious rivals at present, and it’s not inconceivable that new entrants will emerge. However, we believe that Uber has a significant advantage as the world’s largest mobility platform, allowing it to scale up its service more quickly.
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