Uber (UBER) Soars to Record $58 in 2020 After Finalizing $2.65B Postmates Acquisition
Uber achieves historic stock high following the successful acquisition of Postmates, expanding its dominance in the home delivery market amid favorable regulatory changes.
Uber Technologies, Inc. (UBER) has surged to an unprecedented peak after completing its strategic acquisition of Postmates, a privately held delivery service. This move significantly amplifies Uber's presence in the booming yet still unprofitable home delivery sector. Initially announced in July 2020, the deal was expected to close in early 2021. However, regulatory approval arrived sooner than anticipated in November, following California voters overturning legislation that would have reclassified independent drivers as employees.
Key Highlights
- Uber stock reached an all-time high after California's vote and the Postmates acquisition closure.
- Potential secondary stock offering may be issued to finance the $2.65 billion all-stock deal.
- Current valuations suggest Uber shares might be approaching full pricing.
The exact financing details remain undisclosed, though the transaction was valued at $2.65 billion in stock. Uber estimated that approximately 84 million shares would be issued for fully diluted equity. Investors should consider that recent share price gains could be influenced by anticipation of this secondary offering.
Wall Street analysts have largely embraced Uber, with a consensus rating of "Strong Buy" based on 19 buy and 2 hold recommendations. No analysts currently advise selling. Price targets range between $41 and $65, with the median target at $53. The stock's recent surge above this median suggests a potential slowing or plateau in the near future.
UBER Stock Performance (2019–2020)
Uber debuted on May 10, 2019, at $42.00, quickly climbing to $47.08 by late June before experiencing volatility and a decline to $25.58 in November. The stock rebounded to the low $40s in February 2020 before plunging to an all-time low of $13.71 in March amid market turmoil. Following this, Uber recovered into the second quarter, stabilizing in the upper $20s. The decisive breakout after the California vote propelled shares past the 2019 highs, confirming a bullish trend with higher highs.
The On-Balance Volume (OBV) indicator has led price movements throughout 2020, peaking in February and maintaining a steady upward trajectory from May. Despite price gains, accumulation weakened after November, likely due to profit-taking ahead of the anticipated secondary offering and increased volatility.
Conclusion
Uber's stock rally reflects strong investor confidence following regulatory relief and the Postmates acquisition, positioning the company to solidify its leadership in home delivery. However, the potential secondary offering to fund the transaction introduces volatility risks, requiring investors to monitor price fluctuations carefully.
Disclosure: The author held Uber shares in a family account at the time of publication.
Discover engaging topics and analytical content in Company News as of 08-12-2020. The article titled " Uber (UBER) Soars to Record $58 in 2020 After Finalizing $2.65B Postmates Acquisition " provides new insights and practical guidance in the Company News field. Each topic is meticulously analyzed to deliver actionable information to readers.
The topic " Uber (UBER) Soars to Record $58 in 2020 After Finalizing $2.65B Postmates Acquisition " helps you make smarter decisions within the Company News category. All topics on our website are unique and offer valuable content for our audience.