Uber Stock Down 13% in November – Time to Buy UBER Stock?

The price of Uber stock went down 13% in November following the launch of its Uber One membership program and amid concerns about the impact that the Omicron variant of the coronavirus could have on the firm’s recovery.

On 17 November, the company shared all the details about this membership program. According to Uber, for $9.99 a month or $99.99 per year users will enjoy a 5% discount on eligible rides and deliveries, $0 delivery fees on eligible orders, VIP treatment, and cash rewards.

Until 29 November, Uber offered a discount window that allowed users to enroll in the program for only $49.99 for a one-year period.

“Uber One offers elevated access to all of Uber: rides, delivery, and groceries. Members get preferred pricing, premium support, and surprise and delight perks that can make every day more fun”, stated Awaneesh Verma, Uber’s head of Membership, following the announcement of the program.

The market’s reaction to the news hasn’t been kind as the stock price has shed over 15% since the announcement was made. However, a portion of that decline could also be attributed to concerns about the Omicron variant and its potential impact on Uber’s operations.

What can be expected from this ride-hailing stock as we head to the last month of the year? In this article, I’ll be assessing the price action and fundamentals of UBER stock to outline plausible scenarios for the future.

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Uber Stock – Technical Analysis

In my latest article about Uber, I emphasized that the outlook for the stock was bearish amid the market’s reluctance to push the stock above the 200-day simple moving average. Since the article was published, the stock went on to decline nearly 11% while it is breaking below some key areas of support.

One interesting development is that Uber stock is close to filling the price gap left behind in November last year back when Pfizer (PFE) announced the elevated efficacy levels of its COVID vaccine.

Meanwhile, the stock is also breaking below a key horizontal support found at the $40 level while momentum indicators are flashing bearish signals all over.

In this regard, the Relative Strength Index (RSI) is standing at 34 and getting close to oversold levels while the MACD has moved to negative territory. This move is being accompanied by steadily increasing negative histogram readings

All things considered, the outlook for Uber stock remains bearish and negative news on the virus front could accelerate the downtrend due to the virus-sensitive nature of Uber’s business.

Uber Stock – Fundamental Analysis

109 million people used Uber’s suite of services by the end of the third quarter of 2021 according to the company’s latest quarterly report. It is hard to estimate how many of those people will sign up for Uber One.

Assuming that 10% to 30% of its users sign up with the service, Uber could bring around $1 to $3 billion in extra revenues through this program. This number represents from 8% to 23% of the company’s pre-pandemic top-line results of $13 billion.

Moving forward, analysts will probably wait for more data to come in about the rate at which users are enrolling for Uber One before assessing the impact that the program could have on the firm’s outlook.

On the other hand, data from Koyfin indicates that Uber’s forward P/S ratio has declined to 3.6x. This is 3.4 points lower than the peak multiple showcased by the stock earlier this year.

Uber’s business model is highly disruptive and the pandemic has strengthened its Eats unit. Moving forward, once the health crisis is fully over, the company could see its top-line results surging to the $20 billion range.

However, Uber’s inability to produce positive operating income remains a concerning factor. Until that changes, the stock price will probably remain highly volatile.

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