CNBC’s Jim Cramer on Tuesday said he would not buy shares of Uber when it lists for the first time on the New York Stock Exchange Friday.

“As much as I hate to be a negative Nancy … I would pass on Uber, unless you can get a piece of the actual IPO and then immediately ring the register at the opening,” the “Mad Money” host said. “Other than that, though, when you look at the fundamentals, which no one is doing … there’s just not much here worth getting excited about.”

Uber’s proposed price range of $44 to $50 per share is a reasonable valuation, but it won’t be cheap, Cramer said. The stock would trade at a premium as high as 6-times the company’s 2019 sales, he said.

“There’s a universe where that is cheap beyond, not for a company with 20% revenue growth, though,” Cramer said. “Although, it’s a heck of a lot less pricey than what we’ve seen [from other IPOs], and it’s cheap, downright cheap, versus IPO-darling Beyond Meat. “

There is cause for concern about Uber following Lyft’s debut to public markets, he said. Still, Uber offers more options than Lyft, including food delivery and logistics segments, and has a much larger reach in 700 metropolitan areas on six continents, he added.

While Uber is a larger business with more to offer than its chief rival, growth is slowing, sales are dropping, and the company is still far from turning a profit, Cramer said.

“Uber has spent years taking over the ride-sharing business, either via acquisitions or through aggressive internal expansion,” he said. “They’re the undisputed king of this business, and in many ways, I think Uber is the future of transportation.”

But Uber’s potential to shape the future doesn’t mean its an automatic good stock to invest in, Cramer said.

Gross bookings increased 45% to $49.8 billion in 2018, and revenue increased 42% to $11.3 billion — but Uber still lost $3 billion for the year, he said. That number is down from a $4 billion loss in 2017, but it’s still a problem, he added.

Net revenue growth on its core platform, which includes ride-sharing and Uber Eats, decreased from 125% in 2017 to 39% in 2018. The company forecast growth for the segment of about 10% for the first quarter of 2019, Cramer said.

“That’s a hideous slowdown,” he said.

As far as profitability, Uber’s margins are headed in the wrong direction, Cramer said. The company posted a first-quarter EBITDA margin — a measure of a company’s overall financial performance — of negative 31%. That marks a double-digit drop from the year before, when EBITDA margin rang in at negative 10.8%, he highlighted.

The contribution margin on the core platform, representing sales revenue minus variable costs, was 18% a year ago, but the company is estimating a negative margin of between 4% and 7% for the first quarter, Cramer said.

“This number hasn’t been negative since 2016,” he said. “I am worried that Uber was dealing with a very competitive environment in the first quarter … which led to lots of discounts, the last thing you want to hear about with any IPO, let alone any stock.”

While many investors are worried about the trade war between the United States and China, Cramer said he is more worried about the excitement surrounding Uber’s debut on the public market. It could become the third-largest technology IPO in history behind Alibaba and Facebook, he said.

The deal could raise as much as $10 billion for the platform.

“I’ve been concerned that investors will sell all sorts of tech stocks so they can raise capital to participate in this exciting Uber deal,” he said. “I fear what might happen if irrationally exuberant investors swoop in and bid the stock up like crazy at the opening using market orders, not limited orders … only for the darned thing to sell off dramatically as people who got in on the actual deal start ringing the register in droves.”



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