Uber Stock Stumbles on Grocery Delivery Acquisition

Short sellers have been piling on the rideshare stock

Deputy Editor
Jun 21, 2021 at 10:51 AM
facebook twitter linkedin


Uber Technologies Inc (NYSE:UBER) is down 2.7% at $48.36 this morning, following news that the rideshare company entered deal to acquire the remaining shares of grocery delivery name Cornershop. Uber took a major stake in the company in the third-quarter of 2020. Uber is set to acquire 47% interest in exchange for 29 million shares of its stock, with the transaction expected to be completed next month. 

On the charts, Uber stock has taken a 24% haircut since its Feb. 11 record high of $64.05. The $48 level has emerged as an area of consolidation, while the shares' descending 40-day moving average has rejected recent rally attempts, a trendline that has also served ceiling in late April.  

Despite the middling price action, analysts are optimistic on UBER. Of the 27 in coverage, 24 call it a "buy" or better. Plus, the 12-month consensus price target of $68.64 is a 38.1% premium to current levels. 

Short interest has been on the rise though, adding 19.5% in the last two reporting periods. The 73.24 million shares sold short make up 4.9% of  the stock's available float, and would take nearly four days to cover at its average daily pace of  trading. 

Now looks like an ideal time to speculate on UBER with options. This is per the security's Schaeffer's Volatility Index (SVI) of 39%, which stands higher than just 3% of readings from the past year. This means options traders have been pricing in extremely low volatility expectations for Uber stock right now. 

Celebrate 40 Years of Schaeffer's With 4 FREE Stock Picks!


 




 
Special Offers from Schaeffer's Trading Partners