Uber is a revolutionary company, but don't rush to buy the stock, Susquehanna Financial Group said Tuesday.
"We agree that UBER is a once in a generation company with a massive opportunity to revolutionize transportation and logistics," Susquehanna analyst Shyam Patil said in a note to clients. "Slowing growth, however, creates uncertainty around future trajectory."
Since the ride-hailing company went public May 10 on the New York Stock Exchange in the most highly anticipated IPO of the year, investors have debated the company's success trajectory, especially if and when Uber will become profitable.
Susquehanna is less concerned about the the lack of profitability of Uber, given the growth stage of the company, Patil said. Susquehanna estimates the company with become EBITDA positive in 2023. But Patil said it's concerning to see decelerating growth over the past several quarters.
"Bookings growth has slowed from the high 50s% y/y in 1Q18 to mid 30s% y/y in 1Q19, while adjusted revenue growth has slowed even more drastically from 85% to 14% over the same period," said Patil.
He said these recent trends surprise him, given the sheer size of the addressable market. This data prompted Susquehanna to have a neutral rating on the stock and a 12-month price target of $42 per share, about where it's currently trading.
Patil also noted Uber's complex financial model will likely weight on the company's valuation.
Uber priced its shares for its public debut at $45 a share. The stock is down more than 7% since its market debut, while ride-hailing competitor Lyft is down more than 24% since it went public on March 29.