Uber Technologies Inc (NYSE:UBER, ETR:UT8)’s ridesharing offering is not facing a material threat in the near term despite speculation around the effect of incoming robotaxi services, Jefferies analysts say.
Robotaxi fleets will unlikely be able to undercut on pricing, with the rise of automatic driving technologies seen rather as an opportunity for Uber, the bank wrote in a note.
“Potential competition from robotaxis has long been considered a key risk,” Jefferies said.
“The near-term impact to rideshare will be minimal and our view [is] that robotaxi fleets are best off partnering with rideshare.”
Jefferies highlighted that Uber shares had come under pressure in recent weeks due to headlines around Tesla Inc (NASDAQ:TSLA)’s automatic taxi service plans, as well as speculation over supportive regulation for the sector under president-elect Donald Trump most recently.
This “creates a more attractive entry point” though, the bank said, after the stock has fallen 14.8% to $68.58 in the past month.
Costs are expected to be higher for robotaxi firms unless they partner with the likes of ridesharing company’s, according to the bank.
“Rideshare players can help robotaxis maximize utilization, optimize logistics [and] pricing, address barriers to changing preferences, provide fleet management expertise and help navigate [or] establish local regulation,” it said.
A ‘buy’ rating was reiterated as a result, alongside a $100 share price target.