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Uber Returns to Israel with New Playbook
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Uber Returns to Israel with New Playbook

Story Highlights

Uber stumbled in its initial foray into Israel. But the company learned its lessons and has returned to the market with a new playbook that it has put to use in countries like Italy and Germany. 

Uber (UBER) is launching its ride-hailing platform in Israel as it continues its global expansion drive. The move marks a return to Israel, a market that Uber operated briefly some years ago before rivals ganged up to challenge its business model.

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Thousands of drivers have already joined the Uber platform in Jerusalem and Tel Aviv, according to a Reuters report. Apart from the regular taxi service, drivers on the Uber platform in Israel will also offer a ride-sharing service that allows them to carry several passengers at the same time. 

Uber returns to Israel with a new playbook that has worked well for it in other countries. The company will work with existing taxi operators instead of signing up private drivers, and it will accept both independent taxi drivers and those driving for companies. 

Uber shares rose more than 5.5% to $22.52 on July 5. However, the stock is still down almost 50% year-to-date.

Why Did Uber Fail in Israel in 2017?

In its initial attempt to operate in Israel in 2017, Uber only lasted there briefly. Its use of private drivers led to complaints from taxi unions and taxi companies, who accused it of operating without proper licenses. As a result, a court ordered Uber to stop its services. 

In Israel, drivers need a special license to drive a taxi. Additionally, taxi operators are required to have insurance for passengers. The private drivers that Uber signed up in its initial foray lacked these requirements, providing grounds for rivals to challenge its business model. With the issues of driver’s license and insurance addressed now, the stage is set for Uber to take on Gett and Yango in Israel’s ride-hailing market. 

Uber’s New Playbook Relies on Taxi Operators

Uber has adopted a new strategy after its operation model with private drivers faced resistance in some markets. It is partnering with taxi operators to avoid problems as it works to expand its global footprint. The new playbook that Uber introduced in Israel has already been in use in a number of countries in Europe, including Italy, Spain, Germany, Austria, and Turkey. Additionally, Uber works with taxi operators in San Francisco and New York. The company’s goal is to bring every taxi to its platform by 2025. 

Wall Street’s Take on Uber Stock

Consensus rating on Uber stock among analysts is a Strong Buy, based on 26 Buys and two Holds. The average Uber price target of $48.23 implies more than 114% upside potential to current levels. 

Hedge Funds Confident in Uber Stock

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in UBER is currently Very Positive, as 51 hedge funds increased their cumulative holdings of the stock by 19.8 million UBER shares in the last quarter.

Key Takeaway for Investors

Apart from avoiding tensions with industry incumbents, the partnerships with taxi operators could also help Uber solve the driver shortage problem.

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