Uber Rally Looks Like a Buy After Underwhelming Tesla Robotaxi Event
Uber drives to an all-time high, but you still can't count Tesla out.
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Uber UBER is on a roll.
Fears of competition from Tesla TSLA have subsided, in the wake of last week’s We Robot event. Although Tesla’s autonomous vehicles looked cool, the Cybercab is still at least two years away. No mention was made of the new, inexpensive, driver-operated Tesla model that was touted earlier this year.
Don’t get me wrong, I’m not counting Tesla out.
Another of Tesla CEO Elon Musk’s companies, SpaceX, performed an incredible engineering feat this past Sunday, using mechanical arms to capture a massive starship rocket booster. Say what you will about Musk, but bet against him at your peril.
SpaceX isn’t the only thing lighting up the sky. Shares of Uber launched like a rocket on Friday, reaching an all-time high on extremely heavy volume. After a slow start, Uber has now gained 45% year to date.
Regarding Uber’s big rally, the signs were there. Readers were alerted to Uber’s potential on August 13 (green arrow), when the stock roared to a 24% gain in just one week. In the two months since then, Uber has gained an additional 22%.
Uber is well above its key 50-day (blue) and 200-day (red) moving averages. According to the stock’s relative strength index (RSI), Uber is overbought, with a current reading of 72.78.
The overbought reading doesn’t concern me. Often, a stock’s gains will actually accelerate during an overbought condition.
Stocks that are overbought can always become more overbought, especially during a roaring bull market such as the one we’re currently experiencing. I'm staying long Uber.
The picture is less bullish for Tesla, which gapped below its 50-day moving average after the disappointing We Robot event. Earlier this month, third quarter deliveries for Tesla also missed the mark.
On the bright side, Tesla remains above its bullish trend line (black dotted line), as well as its 200-day moving average (red). I’ll admit to some nervousness ahead of Tesla’s upcoming earnings report, scheduled for October 23.
The fact that the We Robot event was delayed for two months and still failed to deliver turned a few heads. The lack of a competing vehicle from Tesla should allow Uber to continue its winning ways.
According to secondmeasure.com, Uber dominates the ride share market with a 76% market share.
Uber is scheduled to report on the morning of October 31.
At the time of publication, Ponsi was long UBER and TSLA.
