Uber Technologies (NYSE:UBER) stock fell 1.35% on May 28. Shares have performed poorly since its initial public offering earlier this month.
The poor performance has attracted the interest of short sellers. Should investors bet the other way?
Data compiled by IHS Markit show that 70% of shares that can be lent out for short selling have already been scooped up by bears. That figure is up 50% from short interest on May 15, Uber’s first day of trading. It is no secret that Uber is facing headwinds to kick off its public listing, but this may present solid opportunities for investors looking long.
Even the most bullish analysts have Uber posting a positive EBITDA by 2023. Profitability is not the concern right now, as Uber is well-positioned to achieve massive growth in the years to come. However, bookings growth has slowed year-over-year and revenue growth was 14% compared to 85% in Q1 2018.
Leaving aside its internal growth, there are macro concerns that may be capping Uber’s potential right now. Major U.S. indexes have retreated from all-time highs as the U.S.-China trade war heated up in May. There is understandable anxiety that this will curb global growth going forward.
That said, Uber is my favourite target of the major IPOs that have launched over the past few weeks. This is a transformational company that is worth betting on. Its early struggles provide long-term investors with a chance to add at a discount in a choppy market.
