Uber Abandons Foodpanda Taiwan Buyout Bid: How to Play the Stock Now

Uber Technologies UBER has terminated its agreement to acquire Delivery Hero's Foodpanda business in Taiwan. The deal, valued at $950 million, was halted due to regulatory hurdles. In December, Taiwan had blocked the deal, citing anti-competitive concerns.While blocking the buyout, the Taiwan Fair Trade Commission argued that in the event of Uber, through its division Uber Eats, acquiring Delivery Hero's Foodpanda business in Taiwan, the combined market share of the two delivery services would increase to 90% on the island. This lack of competition may cause Uber to raise prices. Foodpanda and Uber Eats have been dominating Taiwan’s food delivery market in terms of order volume in Taiwan as a duopoly.UBER has decided not to appeal against Taiwan’s anti-trust regulator’s decision. The San Francisco, CA-based company will pay a deal termination fee of around $250 million.  The deal was announced in May last year. It included a separate agreement for Uber to buy $300 million worth of newly issued shares of the German food delivery firm. The termination of the acquisition will not have any effect on the share-purchase agreement.Uber’s Decision to End Deal Appears PrudentDespite Uber expressing disappointment with the regulator’s ruling, we expect its decision not to file an appeal will not have any adverse impact on its operations. Despite the pullout, Uber remains committed to its operations in Taiwan. It would continue to serve consumers, merchants, and delivery partners.Moreover, Uber Eats and Foodpanda are expected to continue dominating Taiwan’s online food delivery landscape, with other food delivery companies and fast-food delivery apps accounting for a tiny market share. Asian food delivery platforms in the post-pandemic scenario are grappling with intense competition and thin margins. This is because they offer significant discounts in a bid to retain cost-conscious customers.Even though Uber’s primary business is ride-sharing, it has diversified into food delivery and freight over time. Uber’s Delivery business is benefiting from upbeat online order volumes even in the post-pandemic scenario, with the thirst for placing orders online rampant among people.UBER Stock’s Recent Disappointing PerformanceEven though UBER’s decision to abandon the Foodpanda deal is unlikely to hurt the stock for reasons mentioned above, it remains a fact that the UBER stock has not had a good time on the bourse recently. UBER shares have declined in double-digits (i.e. by 12%) over the past month, underperforming another player in the Zacks Internet—Services industry, DoorDash DASH. Uber’s performance is, however, better than industrial levels and its rival, Lyft LYFT.1-Month Price Comparison of UBER StockImage Source: Zacks Investment ResearchTariff Tensions May Hurt UBER StockConcerns about the ongoing trade war are hurting the shares of UBER, which has a global presence. Trump has announced 25% tariffs on imports from Canada and Mexico before temporarily pausing them. However, he has already slapped steep tariffs on Chinese goods and has targeted the European Union with similarly hefty tariffs, sparking fears of a widescale trade war.Of late, U.S. markets have been characterized by a high degree of volatility amid uncertainty surrounding U.S. trade policy and growing anxiety about a slowing U.S. economy. Fears of a slowdown in the economy are detrimental to companies like UBER. Hefty tariffs on the nation’s biggest trading partners have given rise to fears of economic slowdown.This trade war is expected to result in a further increase in volatility and uncertainty going forward. The volatility level represented by the CBOE Volatility Index, also known as the fear gauge, has increased significantly over the past month. UBER, which is already struggling due to a slowdown in gross bookings, may see the ride-sharing market suffer further due to these economic uncertainties. Uber expects gross bookings in the first quarter of 2025 to be hurt by currency-related headwinds. Uber, which dominates the North American ride-sharing market, is likely to increase its focus on suburban markets to drive growth amid fears of market saturation.What Do Estimates Say for UBER?In the past 60 days, earnings per share estimates for UBER have moved south for the first and second quarters of 2025 and the full years 2025 and 2026.Image Source: Zacks Investment ResearchUBER’s High Debt Load: Another Cause for WorryWe are concerned about Uber’s high debt levels. Long-term debt increased 45.6% to $8.3 billion at 2024-end from 2019. Image Source: Zacks Investment ResearchUBER Shares Trade at a PremiumUBER stock is not cheap, as its Value Score of C suggests a stretched valuation at this moment.In terms of price-to-earnings (forward 12-month), UBER is trading at 25.96X, higher than the industrial levels of  18.6X.Image Source: Zacks Investment ResearchEnd NoteAs the write-up suggests, UBER faces many headwinds. Having said that, Uber's fundamentals remain strong. Diversification is imperative for big companies to reduce risks, and UBER has excelled in this area. The company has engaged in numerous acquisitions, geographic and product diversifications, and innovations. Prudent investments enable Uber to extend its services and solidify its comprehensive offerings.Uber’s announcement, earlier this year, to start an accelerated $1.5 billion stock buyback program highlights not only its shareholder-friendly strategy but also signals confidence in its ongoing business strategy. Uber’s recent partnership with NVIDIA NVDA has positioned it as a formidable rival to the likes of Tesla TSLA in the lucrative robotaxi market. With its vast network of drivers and customers, UBER can quickly scale autonomous services once the technology matures. As highlighted above, Uber has enough factors in its favor, which leads us to conclude that this Zacks Rank #2 (Buy) stock is an ideal candidate for addition to one’s portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NVIDIA Corporation (NVDA): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis Report Lyft, Inc. (LYFT): Free Stock Analysis Report Uber Technologies, Inc. (UBER): Free Stock Analysis Report DoorDash, Inc. (DASH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks