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Uber Has New Competition In London

Uber Has New Competition In London

Will there be a changing of the guard in who gives rides to Buckingham Palace?

Uber Technologies Inc. (NYSE: UBER) got a new competitor for ride-hailing in London with Bolt returning to the market.

The new competition is more bad news for Uber following high profile executive departures. Bank of America said the latest challenge will be a "near-term press headwind," but Uber continues to have an advantage on scale.

The Analyst

Bank of America analyst Justin Post kept a Buy rating and $53 price target on Uber.

The Thesis

Bolt was granted a 15-month operating license from Transport for London to offer rides in the British capital, and said it will offer riders a 50-percent discount on their first 10 trips during the re-launch period.

Post acknowledged the new competition presents a headwind, but said it will be offset by improving competitive trends in the United States.

“Uber may experience decreased profitability in London in the near-term if it chooses to match Bolt, but it remains the dominant player in the market with an advantage in scale, likely leading to lower wait times and a long-term EBITDA per trip advantage as competitors run out of dry powder to invest in discounting rides and increasing driver incentives,” Post wrote in a note.

Bolt now operates in 100 cities in 30 countries after having launched in Estonia in 2012. Uber launched its London service in 2012 and now has nearly 50,000 drivers there.

Price Action

Uber shares were trading down marginally Wednesday at $42.15.

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Photo courtesy of Uber.

Latest Ratings for UBER

Jun 2019Initiates Coverage OnOutperform
Jun 2019Initiates Coverage OnOutperform
Jun 2019Initiates Coverage OnOutperform

View More Analyst Ratings for UBER
View the Latest Analyst Ratings

Posted-In: Bank of America Bolt Justin PostAnalyst Color Travel Analyst Ratings Tech General Best of Benzinga


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