How to Buy Uber Stock: Invest in Ride-Sharing & Food Delivery for Hire
Investing is an important part of saving for the future. It’s one of the best ways to grow your nest egg over time.
Many people like to invest by picking individual companies to buy. This can be an exciting way to invest and can be rewarding, but it’s also highly risky. If you invest in the wrong company, your investment may not gain value or could even lose value.
Ridesharing is still a relatively new industry, but it’s an exciting one with the potential to change the way that we get around.
This is especially true as technologies like self-driving cars become more commonplace.
Uber is one ride-sharing company that many people are familiar with. If you’re considering investing in Uber here’s what you need to know.
Uber (NYSE: UBER) is a San Francisco based technology company. The company was founded in March 2009 and started by providing ridesharing services across the United States.
Since, the company has expanded to serve almost 70 countries and to offer services including food delivery.
The company went public in 2019, and now has a market capitalization of almost $90 billion.
Research and Analysis
Whether you want to invest in a century-old blue chip stock or a young tech company, it’s important that you do some research and due diligence before buying shares.
Every investor’s approach to research is different. Some like to do fundamental analysis. This involves looking at a company’s performance and hard numbers, like revenue, expenses, and debts.
Fundamental analysts use this information to predict a company’s future performance.
They may also look at the company’s competition to see how each business compares.
Some of Uber’s primary competitors include:
- Lyft (LYFT)
- Grubhub (GRUB)
- DoorDash (DASH)
Other investors use technical analysis, which aims to predict future price movements by looking for patterns in a company’s price charts.
Even companies that look great on paper or have positive technical indicators aren’t guaranteed to increase in value.
The company’s prospects might change as consumers find another product they prefer to use or a competitor unveils a new product.
The management team may also simply fail to grow the business.
Whenever you invest in an individual company, you’re taking a risk. If that business does well, you’ll profit, but if it fails, you’ll lose out.
Every company’s success relies on its ability to produce, maintain, and sell new products and services. Without successful products, companies have nothing to sell and no way to produce revenue to keep the business running.
With technology companies like Uber, that means expanding into new industries, like moving from ridesharing to food delivery, and maintaining a sufficiently sized userbase to make the service convenient to use.
If people suddenly decide to stop driving for Uber, the company won’t be able to keep its customers.
One unique risk that Uber faces is regulation from the government.
Uber operates using a model where it does not directly employ the drivers that provide its services.
Instead, those drivers are paid as independent contractors.
Uber drivers don’t receive employment benefits such as health insurance, paid time off, or access to a retirement plan.
Many view this model as unfair, letting Uber avoid many of the costs of hiring a workforce by taking advantage of its drivers. Some regulators have tried to fight this by forcing Uber and similar gig economy services as employees.
For example, California passed a law to this effect. However, a state ballot petition struck down portions of the law, meaning the companies can continue as they have.
Still, other states or the federal government may try to enact similar regulations that could increase Uber’s costs or reduce its profits.
Other Ways to Technology or Rideshare Companies
Investing directly in a single company can be exciting. It can be fun to watch the company in the news and to read predictions about its future.
However, putting all your eggs in one basket is risky.
Remember, diversifying your portfolio can help protect you against huge losses if the business you’ve invested in fares poorly.
A popular strategy for building a diversified portfolio is to invest in mutual funds or ETFs. These funds hold shares in dozens, hundreds, or even thousands of companies, letting you easily build a diverse portfolio by buying shares in one fund.
There are funds that hold a huge variety of stocks and funds that focus on specific industries, like technology. If you want to focus on a specific industry, you can find a fund that lets you do that.
Most mutual funds and ETFs will publish a list of their holdings.
If you want to make sure that some of your investment goes toward a specific stock, such as Uber, you can read the fund’s disclosures to make sure that it holds the company you’re interested in.
How to Buy Uber Shares
If you’ve decided that buying shares in Uber is the right strategy for you, the first thing that you’ll want to do is open a brokerage account.
Open a brokerage account
Brokerage companies are companies that facilitate investment in stocks, bonds, ETFs, mutual funds, and other securities.
Some companies, like Vanguard and Fidelity, run brokerage accounts and run their own mutual funds and ETFs.
Most offer perks, like waived fees if you invest in their mutual funds. If you know what fund you want to invest in, that could affect the brokerage you choose to work with.
Once you’ve chosen a brokerage to work with, you have to open an account.
That typically means filling out an application, providing some identifying information, and linking a bank account that you can use to fund your brokerage account.
Place a buy order
When you’re ready to buy shares, you’ll have to submit a buy order.
There are a couple of different ways to place that order, each with pros and cons.
The most common is the market buy order. With this order, all you have to do is specify the number of shares you want to buy. Your brokerage will buy those shares for you at the cheapest price available.
With a buy-limit order, you specify the number of shares to buy and the maximum price you’ll pay. Your broker will buy those shares at the cheapest available price, but not if the cheapest price available is above your limit.
Market orders are simpler to place but can be unpredictable. You’ll buy shares at the cheapest available price, even if that price is far higher than you expect to pay. This can often happen if you’re buying shares in companies that are not frequently traded.
Limit orders are generally safer because you can guarantee the maximum price that you’ll pay.
The drawback of limit orders is that they run the risk of not going through at all. If the share’s price jump above your limit and don’t come back down, you’ll never buy the shares.
Consult an Advisor
Investing is always subject to risk.
That risk is intensified if you’re buying shares in a single company.
It can be exciting to buy shares in a company you like, but remember that diversification is an important part of building a strong investment portfolio.
Consulting with an advisor to help you make good investing decisions is a good way to make sure you don’t risk too much of your portfolio on high-risk stocks.
As with all investing, you are putting your money at risk, so only invest money you can afford to lose.