Avestar Capital LLC Makes New Investment in Uber Technologies Inc (NYSE:UBER)

Foundation Capital LLC bought a new position in shares of Uber Technologies during the second quarter valued at approximately $34,801,000.

Uber Technologies logoAvestar Capital LLC acquired a new stake in Uber Technologies Inc (NYSE:UBER) during the 2nd quarter, according to the company in its most recent filing with the Securities & Exchange Commission. The institutional investor acquired 629 shares of the ride-sharing company’s stock, valued at approximately $27,000.

A number of other hedge funds have also modified their holdings of the business. Enlightenment Research LLC purchased a new stake in Uber Technologies during the second quarter valued at about $543,000. Burleson & Company LLC bought a new position in Uber Technologies in the second quarter worth about $289,000. National Asset Management Inc. bought a new position in shares of Uber Technologies during the second quarter valued at approximately $642,000. Foundation Capital LLC bought a new position in shares of Uber Technologies during the second quarter valued at approximately $34,801,000. Finally, State Board of Administration of Florida Retirement System bought a new position in shares of Uber Technologies during the second quarter valued at approximately $864,000. 45.32% of the stock is currently owned by institutional investors and hedge funds.

Uber Technologies stock traded down $0.82 during midday trading on Friday, hitting $33.25. 9,206,427 shares of the stock were exchanged, compared to its average volume of 8,745,539. The stock’s 50-day moving average price is $36.41. The company has a current ratio of 2.57, a quick ratio of 2.57 and a debt-to-equity ratio of 0.36. Uber Technologies Inc has a fifty-two week low of $30.67 and a fifty-two week high of $47.08.

Uber Technologies (NYSE:UBER) last issued its quarterly earnings results on Thursday, August 8th. The ride-sharing company reported ($4.72) earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of ($3.33) by ($1.39). The company had revenue of $3.17 billion for the quarter, compared to the consensus estimate of $3.39 billion. During the same period in the prior year, the company earned ($2.01) EPS. The firm’s revenue was up 14.4% compared to the same quarter last year. As a group, analysts forecast that Uber Technologies Inc will post -7.2 EPS for the current year.

Several equities research analysts recently weighed in on UBER shares. Mizuho initiated coverage on shares of Uber Technologies in a research report on Tuesday, June 4th. They set a “buy” rating and a $50.00 price target for the company. Stifel Nicolaus began coverage on shares of Uber Technologies in a report on Tuesday, July 2nd. They issued a “hold” rating and a $50.00 target price on the stock. Needham & Company LLC set a $52.00 price target on shares of Uber Technologies and gave the stock a “buy” rating in a research note on Thursday, July 11th. Morgan Stanley decreased their price objective on shares of Uber Technologies from $57.00 to $53.00 and set an “overweight” rating on the stock in a research report on Thursday. They noted that the move was a valuation call. Finally, Canaccord Genuity started coverage on shares of Uber Technologies in a report on Tuesday, June 4th. They issued a “buy” rating and a $55.00 target price on the stock. Ten research analysts have rated the stock with a hold rating and twenty-four have given a buy rating to the company’s stock. The stock has an average rating of “Buy” and an average target price of $53.50.

Uber Technologies Profile

Uber Technologies, Inc develops and supports proprietary technology applications that enable independent providers of ridesharing, and meal preparation and delivery services to transact with end-users worldwide. The company operates in two segments, Core Platform and Other Bets. Its driver partners provide ridesharing services through a range of vehicles, such as cars, auto rickshaws, motorbikes, minibuses, or taxis, as well as based on the number of riders under the UberBLACK, UberX, UberPOOL, Express POOL, and Uber Bus names; and restaurant and delivery partners provide meal preparation and delivery services under the Uber Eats name.

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Institutional Ownership by Quarter for Uber Technologies (NYSE:UBER)

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Comerica Bank Makes New $587000 Investment in Uber Technologies Inc (NYSE:UBER)

Comerica Bank bought a new position in shares of Uber Technologies Inc (NYSE:UBER) in the 2nd quarter, according to its most recent Form 13F …

Uber Technologies logoComerica Bank bought a new position in shares of Uber Technologies Inc (NYSE:UBER) in the 2nd quarter, according to its most recent Form 13F filing with the SEC. The fund bought 13,454 shares of the ride-sharing company’s stock, valued at approximately $587,000.

A number of other institutional investors and hedge funds also recently added to or reduced their stakes in UBER. Legacy Advisors LLC acquired a new position in shares of Uber Technologies during the 2nd quarter worth about $26,000. Sound Income Strategies LLC purchased a new stake in shares of Uber Technologies in the 2nd quarter valued at about $28,000. Signaturefd LLC purchased a new stake in shares of Uber Technologies in the 2nd quarter valued at about $31,000. Regal Wealth Group Inc. purchased a new stake in shares of Uber Technologies in the 2nd quarter valued at about $32,000. Finally, Trustcore Financial Services LLC purchased a new stake in shares of Uber Technologies in the 2nd quarter valued at about $36,000. 45.32% of the stock is owned by hedge funds and other institutional investors.

Shares of Uber Technologies stock traded down $0.82 during trading hours on Friday, reaching $33.25. 9,206,427 shares of the company’s stock were exchanged, compared to its average volume of 8,745,539. The company has a quick ratio of 2.57, a current ratio of 2.57 and a debt-to-equity ratio of 0.36. The company’s fifty day moving average is $36.41. Uber Technologies Inc has a 52-week low of $30.67 and a 52-week high of $47.08.

Uber Technologies (NYSE:UBER) last issued its earnings results on Thursday, August 8th. The ride-sharing company reported ($4.72) earnings per share for the quarter, missing the consensus estimate of ($3.33) by ($1.39). The company had revenue of $3.17 billion during the quarter, compared to analyst estimates of $3.39 billion. During the same quarter in the prior year, the business earned ($2.01) earnings per share. The company’s revenue for the quarter was up 14.4% on a year-over-year basis. Equities research analysts anticipate that Uber Technologies Inc will post -7.2 EPS for the current year.

Several analysts have commented on the company. Barclays assumed coverage on Uber Technologies in a research note on Tuesday, June 4th. They set an “overweight” rating and a $50.00 price objective for the company. Daiwa Capital Markets assumed coverage on Uber Technologies in a research note on Tuesday, June 25th. They set a “neutral” rating for the company. Bank of America assumed coverage on Uber Technologies in a research note on Tuesday, June 4th. They set a “buy” rating and a $53.00 price objective for the company. Oppenheimer set a $55.00 price objective on Uber Technologies and gave the company a “buy” rating in a research note on Friday, August 9th. Finally, BTIG Research initiated coverage on Uber Technologies in a research report on Tuesday, June 4th. They set a “buy” rating and a $80.00 target price on the stock. Ten research analysts have rated the stock with a hold rating and twenty-four have assigned a buy rating to the company’s stock. The company has a consensus rating of “Buy” and an average price target of $53.50.

Uber Technologies Company Profile

Uber Technologies, Inc develops and supports proprietary technology applications that enable independent providers of ridesharing, and meal preparation and delivery services to transact with end-users worldwide. The company operates in two segments, Core Platform and Other Bets. Its driver partners provide ridesharing services through a range of vehicles, such as cars, auto rickshaws, motorbikes, minibuses, or taxis, as well as based on the number of riders under the UberBLACK, UberX, UberPOOL, Express POOL, and Uber Bus names; and restaurant and delivery partners provide meal preparation and delivery services under the Uber Eats name.

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Institutional Ownership by Quarter for Uber Technologies (NYSE:UBER)

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Reviewing Uber Technologies Inc. (UBER)’s and 2U Inc. (NASDAQ:TWOU)’s results

Both Uber Technologies Inc. (NYSE:UBER) and 2U Inc. (NASDAQ:TWOU) are Application Software companies, competing one another. We will …

Both Uber Technologies Inc. (NYSE:UBER) and 2U Inc. (NASDAQ:TWOU) are Application Software companies, competing one another. We will contrast their profitability, analyst recommendations, risk, institutional ownership, dividends, earnings and valuation.

Earnings and Valuation

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Uber Technologies Inc. 40 4.64 N/A 0.02 2341.11
2U Inc. 44 2.54 N/A -0.79 0.00

Table 1 demonstrates Uber Technologies Inc. and 2U Inc.’s top-line revenue, earnings per share and valuation.

Profitability

Table 2 provides us the net margins, return on equity and return on assets of both companies.

Net Margins Return on Equity Return on Assets
Uber Technologies Inc. 0.00% 0% 0%
2U Inc. 0.00% -6.5% -5.4%

Liquidity

The Current Ratio and a Quick Ratio of Uber Technologies Inc. are 1.7 and 1.7. Competitively, 2U Inc. has 5.1 and 5.1 for Current and Quick Ratio. 2U Inc.’s better ability to pay short and long-term obligations than Uber Technologies Inc.

Analyst Ratings

Uber Technologies Inc. and 2U Inc. Recommendations and Ratings are available on the next table.

Sell Ratings Hold Ratings Buy Ratings Rating Score
Uber Technologies Inc. 0 1 4 2.80
2U Inc. 0 2 1 2.33

Uber Technologies Inc.’s upside potential is 69.02% at a $56.2 consensus target price. 2U Inc. on the other hand boasts of a $37.75 consensus target price and a 96.51% potential upside. The information presented earlier suggests that 2U Inc. looks more robust than Uber Technologies Inc. as far as analyst opinion.

Insider and Institutional Ownership

The shares of both Uber Technologies Inc. and 2U Inc. are owned by institutional investors at 33% and 0% respectively. About 10.8% of Uber Technologies Inc.’s share are owned by insiders. Comparatively, 2U Inc. has 2% of it’s share owned by insiders.

Performance

Here are the Weekly, Monthly, Quarterly, Half Yearly, Yearly and YTD Performance of both pretenders.

Performance (W) Performance (M) Performance (Q) Performance (HY) Performance (Y) Performance (YTD)
Uber Technologies Inc. -3.7% -4.81% 0% 0% 0% 1.37%
2U Inc. -65.72% -66.87% -78.48% -77.37% -83.03% -74.26%

For the past year Uber Technologies Inc. has 1.37% stronger performance while 2U Inc. has -74.26% weaker performance.

Summary

Uber Technologies Inc. beats 2U Inc. on 7 of the 10 factors.

2U, Inc. provides cloud-based software-as-a-service (SaaS) solutions for nonprofit colleges and universities to deliver education to students. Its cloud-based SaaS platform solutions include online campus, an online learning platform that enables its clients to offer educational content together with instructor-led classes in a live, intimate, and engaging setting through proprietary Web-based and mobile applications. The companyÂ’s integrated back-end applications launch, operate, and support clients’ programs, as well as provide clients with real-time data and analytical insight related to student performance and engagement, student satisfaction, and enrollment. It also offers a suite of technology-enabled services, including content development and student acquisition, admissions application advisory, student and faculty support, student field placement, accessibility, immersion support, faculty recruitment, and state authorization services. The company was formerly known as 2Tor Inc. and changed its name to 2U, Inc. in October 2012. 2U, Inc. was founded in 2008 and is headquartered in Lanham, Maryland.

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Unicorn Valuation Rout Casts Dark Clouds Over SoftBank Group’s Vision Funds

The We Company (formerly known as “WeWork”) might cancel its planned IPO. One of the parties urging for a cancellation is SoftBank Group Corp., …

SoftBank Group Corp. (OTCPK:SFTBF;OTCPK:SFTBY) and its Vision Fund face the risk of paper gains turning to paper losses following the loss in valuation of recently listed portfolio companies and potentially upcoming decreases in valuation of yet private ones.

I already alluded to that risk some months ago, after Uber Technologies Inc.’s (UBER) rather disappointing post IPO performance. Uber shares continued trading downwards since resulting in SoftBank being in the loss zone on its investment in the company.

Now SoftBank is reportedly urging The We Company (formerly known as “WeWork”) to postpone its IPO -which was initially scheduled for as early as this year – in order to prevent its valuation from declining.

Paper Gains Might Turn Into Losses Quickly

SoftBank reported impressive profits from the Vision Fund. The fund accounted for profits of ¥397.6 billion, nearly 60 percent of the company’s total operating income of ¥688.8 billion, in the quarter ended June 30th. This does, however, unrealized valuation gains of ¥408.5 billion. And unfortunately such gains may turn into losses fairly quickly if valuations decline.

The We Company could become the source of such decline in the nearer future. The latest funding round valued the company at $47 billion. However the funding was led by SoftBank meaning the sky-high valuation is in no small part the result of SoftBank’s own investment. In other words: the company itself decided at which level to value the asset which it already owned a good portion of thus in essence creating its own profit out of the air. Yet said profit exists only on paper until the moment when someone else is willing to pay that very same price. As it turns out the public market is not. Thus SoftBank’s eagerness to cancel the listing for the time being.

Now if The We Company cancels its IPO a new problem would immediately arise. Without the proceedings it would need to turn to other sources for further funding. After all the business is still far away from profitability. There are hence but two ways to obtain the necessary capital. Either the company has to borrow money – which would of course put considerable pressure on the balance sheet. The alternative would be another private funding round. But it might turn out to be a rather difficult endeavor to come up with investors willing to provide the necessary amount at a valuation that the public market evidently considers heavily overvalued. So at the end of the day SoftBank would probably be forced to provide the funding itself if it seeks to uphold the valuation level.

And the We Company is not the only such problem. While the investment in Slack Technologies Inc. (WORK) still accounts for considerable gains, the stock has fallen further and further since its listing. And of course Uber as of the time of writing trades at a price at which SoftBank is already several hundred millions underwater on its investment. Since those companies are public by now, SoftBank is unable to simply establish a valuation it deems appropriate through an investment round. Theoretically it could purchase stocks on the open market until such price level would be reached. Yet this would face some obstacles in reality. Suffice it here to say, that such measures are highly unlikely.

Neither should go unnoticed that besides the high profile names that are already public or at are or were at one point in the process of going public, the Vision Fund portfolio contains a host of other private companies. Since most of the companies do not report their financials, it cannot be ruled out that there might be imminent decreases in valuation in other cases as well once a listing happens.

For all the reasons pointed out above the Vision Funds – paper – profits might before long give way to sizable losses.

Vision Fund II Might Come Into Jeopardy

The Vision Fund and its brethren both existing and planned are the centerpiece of SoftBank’s long term strategy. Therefore trouble for the Vision Fund equals trouble for the mother company.

Doubts about the funds ability to achieve expected returns could negatively affect the inception of the planned even larger (about $108 billion in volume compared with the first fund’s less than $100 billion) Vision Fund II. And of course a profitable Vision Fund would certainly help to come up with the $38 billion that SoftBank plans to contribute itself.

It appears questionable to me whether investors would be willing to provide a combined $70 billion for a second fund if the first fails to meet expectations. Among the potential investors are Apple Inc. (AAPL), Microsoft Corp. (MSFT), several Japanese banks and insurance companies National Investment Corporation of National Bank of Kazakhstan, Foxconn Technology Group, Standard Chartered (OTCPK:SCBFF), and yet unnamed Taiwanese “major participants” according to SoftBank. Reportedly, Emirati sovereign wealth fund Mubadala which has already been a contributor to the first fund is considering an investment as well. Some of those institutions might reconsider their commitment if the first Vision Fund underperforms.

Conclusion

The deterioration of the valuations of high priced yet unprofitable unicorn companies seriously endangers the performance of SoftBank Group Corp.’s Vision Fund. It might potentially have a negative effect on investors willingness (and SoftBank’s ability) to contribute to a similar but even larger Vision Fund II. This might be devastating for SoftBank which is in the process of transforming itself into an investment company.

A listing of the first Vision Fund – if indeed it ever has been entertained in a serious fashion – would probably be off the table as well. Instead, rather than unlocking value through a separate listing, the company might be forced to contribute further funds in order to preserve valuations of private portfolio company.

All in all, my formerly neutral outlook for SoftBank turns more negative given the recent developments regarding “unicorn” valuations and the negative consequences that may very well arise for the company.

Disclosure:I am/we are long AAPL.I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Disclaimer: All research contained in this article was done with utmost care. However, I cannot guarantee accuracy. Every reader is advised to conduct his or her own due diligence and research.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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Uber Boosts Junk Bond Sale in First Debt Raise Since IPO

(Bloomberg) — Uber Technologies Inc. sold a larger-than-expected $1.2 billion of bonds rated in the lowest tier of junk in its first debt offering as a …

(Bloomberg) — Uber Technologies Inc. sold a larger-than-expected $1.2 billion of bonds rated in the lowest tier of junk in its first debt offering as a public company.

Strong demand for the notes, which mature in 2027, allowed Uber to raise more than the $750 million originally targeted, though investors held the line on price.

The ride-sharing company priced the bond at a yield of 7.5% after receiving orders worth around $2 billion. It was the same level around which price discussions had started on Thursday, according to people familiar with the matter, who asked not to be identified because the details are private.

Uber plans to use proceeds from the debt sale to help fund its $3.1 billion purchase of Dubai-based competitor Careem as part of a bid to expand its global footprint.

It’s only the second bond sale in Uber’s 10-year history, and the first since it went public and obtained credit ratings earlier this year. The company issued $2 billion of debt in a private placement last October, increasing the size of the two-part deal as orders swelled.

U-Turn

In a sign of its waning exclusivity, Uber has ditched much of the secrecy that surrounded its earlier debt offerings. Instead of sharing only select financial information and marketing its debt directly to investors like it did in the past, it relied on a group of eight banks led by Morgan Stanley to distribute the bonds.

S&P Global Ratings said on Thursday it has assigned a CCC+ rating to the bonds, or seven levels into junk. That’s the same rating it retroactively gave Uber’s privately placed bonds after the IPO in May. Moody’s Investors Service gave the new notes a B3 rating, one step higher than S&P’s.

Uber is only the second borrower to sell bonds with ratings in the CCC range since the end of July, as investors flocked to higher-quality debt in recent weeks.

The company said it would buy Careem in March, marking the largest deal of Chief Executive Officer Dara Khosrowshahi’s tenure. Uber also plans to issue $1.7 billion of convertible notes to help finance the acquisition, which is expected in the first quarter of 2020.

It may have to pay cash for the notes if Careem shareholders do not elect to convert into Uber stock at the predetermined price of $55 within 90 days of issuance.

Road Blocks

Uber still faces an uphill battle to convince investors that it can turn a profit anytime soon. Its stock has lost a quarter of its value since the IPO and the company reported a net loss of over $5 billion in the second quarter. Challenges are also mounting on the regulatory front.

California’s legislature is moving ahead with a bill that may force companies like Uber and its competitor Lyft Inc. to classify drivers as employees rather than contractors, guaranteeing them a minimum wage. Governor Gavin Newsom, who supports the bill, has said he is still open to negotiating possible exemptions. Wall Street analysts are hopeful the two sides can reach a compromise.

“While you can argue Uber’s business model is proven or not, regulation is a key issue for them that won’t be resolved anytime soon,” said John McClain, a high-yield portfolio manager at Diamond Hill Capital Management. “I see all these tech companies as having a regulatory arbitrage versus their competition.”

(Updates with pricing details starting in first paragraph.)

–With assistance from Gowri Gurumurthy, Sally Bakewell and Boris Korby.

To contact the reporters on this story: Davide Scigliuzzo in New York at dscigliuzzo2@bloomberg.net;Molly Smith in New York at msmith604@bloomberg.net

To contact the editor responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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