- Uber badysts at Goldman Sachs are optimistic about the travel company.
- But they think that their business model is a key risk in itself.
- Watch the Uber trade live.
Uber faces an existential threat: Uber.
That's what Goldman Sachs badysts said in a report published on Tuesday that started the coverage of the travel giant and its much smaller and recently public rival, Lyft. The investigation came when the lull period after Uber's initial public offering ended.
According to the bank, one of the key risks for Uber as an investment is its "business model", since some markets do not allow arrest.
The regulation of transportation companies in different markets around the world is a major concern, said Goldman Sachs. Japan, South Korea, Germany, Argentina, Spain and Italy still do not allow Uber to operate its traditional travel business, the company added. Labor costs and how Uber can finally achieve profitability are also concerns.
"Uber's business could be adversely affected if any regulatory authority disagrees with its operating model, consumer protections and / or autonomous development / deployment of vehicles," wrote the badysts led by Heath Terry.
Despite what the firm considers a fairly fundamental risk, Terry and his colleagues are optimistic, nonetheless. Along with most of its Wall Street peers, they slapped a "buy" recommendation for the stock and a target price of $ 56, implying a 32% rebound from current levels.
Tuesday's report comes after Uber revealed last week that its first-quarter net losses totaled $ 1.01 billion. Lyft, which Goldman Sachs started with a "neutral" rating, faces many of the same challenges, Goldman said.
Goldman Sachs and Morgan Stanley were included among Uber's leading book brokers for their disastrous initial public offering. The stock is trading just below the $ 45 where it was quoted last month.
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