Uber stock is the IBD Stock of the Day for Friday. Shares of the ride-hailing giant are rallying past a buy point as investors breathe a sigh of relief after Tesla's robotaxi reveal proved more "toothless," as one analyst put it, than an immediate threat to Uber.
Uber stock surged 10.8% to close at 86.34 on the stock market today. With the action, Uber stock broke out past an 82.14 buy point from a nearly six-month-long consolidation pattern. Uber's smaller rival Lyft, meanwhile. is up 8% at 13.39. Tesla stock is down 8% at 218.50.
Investors have spent more than six months fretting over what Elon Musk's plan to launch a Tesla robotaxi service could mean for Uber's dominant position in the ride-hailing business. The big reveal arrived last night in Tesla's "We, Robot" event. While Musk showcased a new CyberCab and said fully autonomous self-driving for Tesla is coming next year in Texas and California, he did not offer many specifics on the plans for a ride-hailing service.
"We consider the event a best-case outcome for Uber, given Tesla did not provide verifiable evidence of progress toward (Level 3 autonomous driving) or quantify the number of robotaxis planned," wrote Jefferies analyst John Colantuoni in a client note early Friday. "We expect Uber to react positively now that investors can focus on fundamentals."
The Jefferies note was titled "Tesla's Toothless Taxi is a Best-Case Outcome for Uber."
Uber Partnering With AV Providers
Uber, meanwhile, has pitched its app as a way for autonomous vehicle developers to find demand for their products. The ride-hailing giant has partnerships with Google's Waymo, GM's Cruise and Avride, among others, to place autonomous vehicles on the Uber app.
"We believe robotaxis could significantly expand Uber's mobility total address market, given the resulting increase in supply would drive lower-priced autonomous offerings over time that expand the use-cases for ride-share," the Jefferies note said Friday.
Tesla, on the other hand, "potentially underappreciates the obstacles to scaling a robotaxi fleet (technology, asset ownership, regulation, fleet management, demand, routing, pricing, utilization)," in Colantuoni's view.
Similarly, analysts with Morgan Stanley said the event was "light on details."
"The long-term autonomous debate is far from resolved, but we don't think We, Robot showed us anything to believe the slope of autonomous adoption will be any steeper than we previously expected," Morgan Stanley analyst Brian Nowak wrote Friday.
Both Jefferies and Morgan Stanley hold positive calls on Uber stock.
There were some notes of caution for Uber. Musk said the CyberCab could cost as little as 20 cents per mile, which could "far undercut Uber's driver costs," BofA Securities analyst Justin Post wrote to clients Friday.
Still, Post said Tesla's event offered "less concrete details and timelines than feared for Uber."
Bulls Running; Tesla Flashes Sell Signal
Uber Stock Clears Handle Buy Point
With Friday's jump, Uber stock surged beyond an 82.14 consolidation pattern buy point, as identified by IBD MarketSurge. Shares are back in record territory for the first time since March. Meanwhile, Uber's Relative Strength line is at its highest point since earlier this year.
Uber has an IBD Composite Rating of 81 out of a best-possible 99, according to IBD Stock Checkup. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Uber will report third quarter earnings results before the market opens on Oct. 31. Analysts are projecting earnings for the September quarter will surge 270% year over year to 37 cents per share while revenue grows 18%.
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