The global ride-hailing company, Uber Technologies (NASDAQ:UBER) announced a reduction of 200 jobs in its recruiting team as it looks to streamline its costs and push profits higher. Meanwhile, even though the Uber stock price has filled investors’ wallets with significant returns in the past few months, analysts remain optimistic about further stock price increases, based on strong company fundamentals.
Job Cuts to Cushion Profits
Transportation conglomerate Uber announced a 35% reduction (or 200 jobs) in its recruiting team, with the goal of maintaining a stable headcount and thus an efficient cost structure.
Indicating that the layoffs are not widespread, Chief People Officer Nikki Krishnamurthy said in a memo, as reported by WSJ, “With attrition being low, the size of the Talent Acquisition team needs to be rightsized to our hiring strategy and set the business up for ongoing success.”
Early in 2023, Uber laid off 150 employees within its freight services division. While the current reduction indicates 1% of the total workforce, on a year-to-date basis job cuts at the company account for a total of 3% of Uber staff.
In May, the company CEO indicated that it plans to cut spending on marketing and pull back on hiring as it places earning profits on high priority.
Improving Earnings, Profitable Business Structure
Uber Q2 earnings highlighted the company’s strong position with a 19% growth in gross bookings, 40% growth in Mobility and 8% in Delivery. A significant narrowing down in net loss and incremental EBITDA margin brightened the results. Looking ahead, the company raised guidance for Q2, led by strong gross bookings and cushioned by a widening free cash flow.
On the mission to strengthen its business model, Uber on the one hand launched video ads across its ride-hailing app, food delivery service, Uber Eats, and alcohol sales platform, Drizly. On the other hand, citing tough competition, Uber exited the Italian and Israeli markets.
Is Uber a Good Buy Now?
With analysts’ optimism surrounding the stock, all 23 Top Wall Street Analysts covering the stock rate it a Buy. Further, analysts’ 12-month average price target of $52.14 implies a 22.2% upside potential from current levels.
Yesterday, Oppenheimer Analyst Jason Helfstein maintained his Buy rating on the stock and raised the price target to $65 from $55, citing higher peer valuations and increased confidence in the company’s consumer boon.
Despite a significant 73% in stock returns in the past 6 months, Uber remains a top large cap pick in Oppenheimer’s coverage as it is likely to benefit from broader industry factors. The rating firm indicates that Uber is likely to see S&P 500 inclusion by December 2023.
In the past two weeks, Uber has seen a pack of analysts raising price targets on the stock along with reaffirmed Buy ratings. It also received a Wells Fargo Buy initiation two weeks ago with a 17.2% upside potential in price from current levels.
