- Interested in trading UBER shares?
- See how broker offerings differ.
- Learn the steps to submitting your first trade.
Uber (NYSE: UBER) is the original ridesharing company. This innovative company practically put the taxi industry out of business, offering low-cost ridesharing across America and the world. This brief guide unpacks the basics of trading UBER for anyone looking to take a position.
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Founded by tech entrepreneurs Travis Kalanick and Garrett Camp, Uber connects willing drivers with people needing rides in their area. The company saw astronomical success after launching in March 2009. Eventually, Uber took its model worldwide, with the company, as well as competing rideshare providers, now available around the globe. However, it has not been all plain sailing, with Uber exiting markets in Southeast Asia and China because of fierce competition from local alternatives.
Trading Uber offers you an excellent way to capitalize on the tech boom as one of the sector's strongest performers with 2020 revenues of over $11.1 billion. Uber launched its IPO in May 2019 at $45, trading down approximately 8% on its first day. Until late 2020, the company traded well below its IPO price but bounced back in 2021.
Where to buy Uber stock
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Step 1: Pick a trading platform
To trade the markets, you need access through a discount broker. Brokers provide the tools you need to trade, with each broker having a different offering. Look for the following when selecting your brokerage firm.
Commissions on your trades are typically the largest expense. However, in recent years, most brokers stopped charging commissions, helping you grow your small account faster. Trading apps like Webull and brokers like TD Ameritrade let you trade commission-free.
Fractional share trading
Fractional shares help you reduce your trading risk. Instead of buying a whole share of UBER, you can take fractions, for example a 10th of a share, and reduce your risk. You still get exposure to the upside in price action while limiting portfolio concentration and downside risk.
Low account fees
Brokers have different costs on trading fees, so shop around for the best rates. Look at the firm's rate card from inactivity and monthly account fees, as well as transaction fees.
Margin trading allows you to boost your trading profits and grow your account quickly. Some brokers enable margin rates of 3:1 or 6:1 on your trades. This allows you to purchase Uber stock to the value of $1,800 with a $300 account, using 6:1 leverage (margin). If the price of Uber falls though, you will have to post additional funds to cover maintenance margin.
Real-time data and charts
Your broker trading platform features charts. However, the pricing data on the charts run with a delay of 15 minutes. You'll have to pay for real-time data, so compare subscription costs between brokers.
Step 2: Fund your trading account
After picking your broker, it's time to fund your account. Your broker accepts debit card deposits and wire transfers. It can take several days for funds to clear into your account, but subsequent deposits — withdrawals — will reflect faster after your first transactions.
Step 3: Decide a budget for investing
While most new traders think about how much they can make on a trade, it would help if you focused on your risk instead. What if your Uber trade moves against you? Would you be comfortable with losing a lot of your entire account balance? Trade with money you can afford to lose.
Step 4: Choose between shares of stock or ETFs
Buying stock gives you exposure to a single asset, and that's risky. If Uber stock tanks, you could end up being forced to decide between selling at a loss or holding on until the stock rebounds in future.
By trading an ETF (exchange-traded fund), you're purchasing a bundle of stocks in a single financial vehicle. The stocks in the ETF are all in the same sector, giving you exposure to price action while mitigating your risk. Two ETFs that contain UBER include Global X Millennial Consumer ETF and Renaissance IPO ETF.
Step 5: Decide what order to use
After selecting your asset and settling on your risk, you'll place your trade using the following order types.
This order type gets you into Uber stock at the next price quoted on the order book. However, the downside of the market order is that the broker might not fill you at the price you wanted. You might click the button at $50, and the broker only fills you at $50.05 or $50.10. That extra 5 to 10 cents is called "slippage."
This order type helps you mitigate slippage on your trades. You set the limit price at $50, and when you click the buy button, the broker fills you at this price. If the price action is moving fast, your broker might not fill or only partially fill your order.
The stop limit lets you take profit automatically when you reach your price target. For instance, you buy Uber at $50, with a target of $53. The broker will sell your stock for you when it reaches the target.
This risk management tool helps newer traders avoid taking a catastrophic loss on their accounts. You set the stop at 5% to 10%, and if the price drops below this threshold, the broker liquidates your stock to prevent you from an outsized loss. For instance, you enter Uber at $50 and set your stop at $47.50, limiting your downside to $2.50 a share.
Step 6: Place the order
Open your broker's trading platform and enter the stock ticker. Then complete the fields for the share size and your limit order price. Now you're ready to trade. When you want to buy, click the button and the broker will execute your order. To get out of a position, click the sell button and the broker will liquidate your shares.
Step 7: Monitor Uber's performance
Uber's stock price trades on the news around the ridesharing industry, gas prices, introduction of autonomous driving tech, regulatory actions, and more. And as with any stock you invest in, pay attention to trading days around earnings reports and partnerships with other companies in the tech sector to take advantage of price volatility.
Uber face stiff competition from Lyft, often seen as a "nicer" version of Uber; Tesla, who are working to introduce their own fleet of self-driving taxis; and Apple, who have been developing their own autonomous car under Project Titan. In addition, Didi, the Chinese ridesharing company who acquired Uber's Chinese operation, are expanding into markets like Australia and Europe. Uber Eats competes against DoorDash (NYSE: DASH), London-listed Deliveroo (LSE: ROO), and a number of local meal delivery services.