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Finance

Why Uber is Setting Up for a Big Move in April

A triangle pattern has emerged in the chart of Uber Technologies (UBER). At some point the stock will break out of this pattern, and a breakout or a breakdown is expected.

UBER is a technology provider that matches riders with drivers, hungry people with restaurants and food delivery service providers, and shippers with carriers. The firm’s on-demand technology platform could eventually be used for additional products and services, such as autonomous vehicles and delivery via drones.

The company’s delivery business has been performing quite well as online order volumes have been surging. It’s plans to acquire alcohol delivery service Drizly also bodes well for future growth. In addition, UBER’s cost-cutting initiatives are supporting its bottom line.

UBER has a strong balance sheet with $6.8 billion in cash as of the end of the year, compared with only $348 million in short-term debt. In the company’s most recent financial results, earnings were up year over year, but still negative. Revenue fell over the same time frame.

The stock has a price-high to-sales ratio of 9.0, which is well above the market, but in-line with the industry average. The stock has shown mixed performance over the near term, but is bullish over the long-term, leading to a Momentum Grade of B in our POWR Ratings system.

Take a look at the 1-year chart of UBER below with my added notations:

  Chart of UBER provided by TradingView

UBER has created a common chart pattern known as a symmetrical triangle. A down trending resistance combined with an up-trending support forms the triangle pattern (green).

There is no way to know which way the stock will break. A trader could enter a long position on a break above the down trending resistance with a protective stop set under the entry level. However, if the stock were to break below the trend line support, a short trade could be entered with a protective stop above the trend line.

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Good luck!

Christian Tharp, CMT

@cmtstockcoach


UBER shares rose $0.40 (+0.70%) in premarket trading Thursday. Year-to-date, UBER has gained 12.25%, versus a 9.42% rise in the benchmark S&P 500 index during the same period.

About the Author: Christian Tharp

I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing. More…

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