Ever considered buying the shares of one of the largest firms in the gig economy in Uber? If you have, you can't pass up reading this page as it's a complete guide for investing in this company. It'll help you understand Uber's business model, history, revenue streams, and growth potential. It also provides specific investing tips and the necessary steps to get started in buying Uber stocks.
Table of Contents
Learn How to Buy Uber Stocks in 3 Easy Steps
Find a Broker
The first thing to get done is to find a well-regulated online broker. Brokers are essential in allowing you to trade not just Uber stocks but also the shares of other companies.
Analyze Uber’s chart
After opening your brokerage account, you'll be provided the tools and platform to enable you to analyze Uber's stock price and develop a strategy for trading it.
Once you formulate your investing approach, the last step is to pull the trigger and start trading Uber.
Uber Company Overview
It's always helpful to have a background of the business you want to invest in, so this section dedicates an overview of Uber as a company. Uber Technologies Inc. is an American tech firm that is most known for its ride-hailing services that disrupted the taxi industry. But as the company evolved through the years, it has also expanded in several other business segments, namely food delivery, freight, road transportation, navigation, and payment processing solutions.
Uber’s operations span across different countries, including the United States, Canada, Latin America, Europe, the Middle East, Africa, and the Asia Pacific.
Uber Business Model and Revenue Streams
The company’s main business, which is its personal transportation service that allows users to order a taxi ride from their mobile devices, aka "ride-hailing," generates revenue by taking a cut from passenger fares.
However in recent years, its food delivery service experienced tremendous growth and has become the primary driver of revenue for the company. This is because Uber earns two ways from this service: delivery charges paid by the customer and restaurant commission for each order.
Its freight and shipping business that it launched in 2017 is also gaining traction. This business segment operates under the same scheme as its flagship service wherein Uber's application connects people with freight shippers and shares a portion of revenue with carriers.
And its last segment, Advanced Technology Group, albeit small, is what some believe to be the key to Uber's profitability. This segment focuses on developing autonomous vehicles and ride-sharing technology, which can reduce Uber's costs significantly upon its eventual rollout.
History of Uber
Uber was founded in 2009 based on the idea of requesting a taxi ride straight from a mobile phone. Its founders were StumbleUpon co-founder Garrett Camp and Red Swoosh founder Travis Kalanick. And under the company name UberCab (which it changed within months), the company went live in San Francisco in 2010, offering on-demand car service.
By 2011, Uber expanded in other major cities like Chicago and New York; it also ventured into the international scene in the same year by setting up operations in France, where its founders first conceived the business's idea.
A year later, Uber introduced UberX, which ultimately became the platform for drivers to enlist their personal vehicles and become an Uber partner.
In mid-2014, Uber made its mark in China by making an official launch in Beijing but was later acquired in 2016 by China’s dominant player in the ride-sharing business, Didi Chuxing. Uber also introduced UberPool in 2014, a service that allowed users to share rides based on proximity, and UberFresh, which in 2015 became UberEats.
In June 2017, the company was investigated for its work culture and its then-CEO, Travis Kalanick, resigned a few weeks later.
Then, in 2019, the company went public and raised $8.1 billion at its IPO price of $45 a share. Last year, the company's net loss amounted to $6.7 billion, which was a slight improvement from the $8.5 billion it lost in 2019.
Brokers That Offer Uber Shares
Here we have listed our top choices of brokers that offer Uber stocks. We believe that these companies provide the best tools and support that will help you trade not just Uber stocks but a whole range of other assets.
Should I Invest in Uber Stock?
The main reason for buying Uber stocks is to ride its potential growth. Because despite the company's long-standing struggle for profitability, it's still a business that offers long-term value.
And this is due primarily to the services it offers that have become essential to society (e.g., affordable rides, shared rides, platforms to earn money, convenience).
Uber Stock Investment Potential
A large part of Uber's unprofitability issue is related to its high variable costs. Its food delivery business, for instance, loses money per transaction because it pays more to the driver than what it charges to the customer. And this is no different from its ride-hailing business.
The company, however, has the option to charge customers higher, but they'd risk losing market share if they do -- especially with the industry's intense competition. So, perhaps the only path to profitability is a gradual reduction of costs, which some believe possible in the future, mostly as the company plans to roll out autonomous vehicles with its ATG segment one day.
Still, that's a long way to go and many investors may not have the appetite for it. But with how Uber traded in the past year amid a spike in its food deliveries, even a hint of a path to breaking even could further boost its stock price.
What Kinds of Investors Should Include Uber in Their Portfolios?
The kind of investors suited for Uber are those who are willing to overlook the company's lack of a healthy bottom line and focus more on its long-term outlook. Uber is still the clear leader in food deliveries and ride-hailing, but it has plans to be ubiquitous in its verticals.
For instance, the company doesn't plan on just ruling ride-sharing; instead, it wants to dominate the entire area of transportation. Uber's already in the taxi and scooter scene, but it also eyes an Uber subway, an Uber flying vehicle, and possibly any other means of getting from point A to point B.
It intends to do the same thing with its food delivery. In truth, Uber is becoming more like a marketplace, which it takes after Amazon's business model. And if Uber manages to address its long-standing tussle against unprofitability, investors who yearn for growth could find it in Uber's stock.
How Much Should I Invest in Uber
If you have decided to invest in Uber at this point, then the next important decision is how much money you should put in. And this boils down to your objective in your funds' exposure to this stock. Because, by now, you already have a broad overview of Uber's business and its risks. Therefore, the investment amount should take into account all these details. Also, it’s always prudent to consider a sum that wouldn't necessarily break the bank.
How to Buy Shares in Uber Stock?
The steps you need to take to buy your first Uber shares are straightforward, and it all starts with getting your brokerage account approved. This process takes roughly a few hours to a few working days, and it all depends on the broker you opened an account with.
Once it’s ready, you can proceed to deposit your initial capital with the available funding methods. You may then see your funds reflect in your account within minutes, but in some cases, it could take days, especially if the chosen deposit method is wire transfer.
After everything is set and your account is funded, you can finally place a transaction on your trading platform to buy Uber stocks. If you need more information about the company, your trading account or even your broker's website will always have the analytical tools, reports, and other pertinent data about each company to help you evaluate your investments better.
Buy Uber Shares Using a Broker
As mentioned, you need a brokerage account to start investing in Uber. And usually, a trading account with an online broker is the best choice for convenience and cost-effectiveness. If this is your chosen route, the process is a lot like opening a bank account.
You must first accomplish an online application form and then submit certain documents such as your passport, driver's license, or social security to verify your identity. These would all be necessary before getting your account approved.
Buy Uber Shares With a Direct Stock Purchase Plan (DSPP)
Investing through a Direct Investment Plan would allow you to invest in any company without a middle man. You would need to connect with the company's transfer agent, which will provide you with the details about the costs of opening an account, minimum initial deposit, and minimum monthly deposit.
However, Uber has stated on its Uber investor website that a direct investment plan is not something the company offers at the moment.
Frequently Asked Questions
Uber's stock rallied for much of last year due to an uptick in food deliveries as most people stayed indoors. This trend may likely continue in 2021 as the world hasn't found an end to the pandemic yet.
As of late, Uber is not profitable and it may take a while for it to get there.
Yes, and this is because Uber moves at an average price of $2 per day. This means that traders looking to gain profits off of short-term fluctuations can indeed find opportunities trading Uber.
The best platform to trade Uber is one that a well-regulated online stockbroker provides.
Uber follows the standard trading time in the U.S., which is 9:30 am to 4 pm ET.
Uber is listed on the New York Stock Exchange (NYSE) under the symbol UBER.