Long Option Trade on Uber

The shares of the rideshare pioneer Uber have been trading in a sideways trend between $50-64 for most of the past six months since November 2020. The recent market rout sent shares down to a low of around $43 on May 12th, and currently trade around $47.  We believe the selling is overdone on Uber, and it has two tremendous tailwinds and one massive headwind ahead.

The headwind first is that former Uber drivers are making money in other ways and Uber has seemed to have a tough time retaining drivers while it competes for labor against companies like Doordash.  In the positive column Uber is able to pay drivers without having to classify them as employees, and second the reopening of the travel economy, business travel, and people leaving their homes should bode well for rideshare demand.

Today we bought the Jan 2023 $60 Calls for $6.65, and expect to hold this position for at least a few months.  Short term selling won't deter our conviction in this long-term trade.