On Thursday, JMP Securities adjusted its stance on Uber Inc. (NYSE:UBER) shares, shifting from Market Outperform to Market Perform. The move comes as the ride-sharing industry is evolving with the transition to autonomous vehicles (AVs).
"We believe AVs offer consumers a better experience, while Waymo is blitzscaling and has nearly unlimited access to capital given the size and potential of the AV ride-share market," the firm said.
Uber's current valuation may remain constrained until the company more effectively navigates the transition to AVs.
The firm noted that the potential regulatory changes expected in 2025 could benefit Tesla (NASDAQ:TSLA), emphasizing the need for Uber to clarify its strategy for the technology shift.
The analysts believe that the transition to a hybrid marketplace, which combines first-party and third-party services, introduces significant execution risks for Uber. Despite acknowledging that Waymo's current scale is too limited to significantly affect Uber's financial results, the firm anticipates that the valuation could be limited during this period of technological shift.
Uber's management of the transition to AV technology is a critical point of focus for JMP Securities. The firm indicates a desire for greater clarity on Uber's approach to this shift before reassessing its potential for a more favorable rating. In the meantime, JMP Securities views Uber's shares as fairly valued, given the current market conditions and the challenges ahead.
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