The news that Uber Inc. co-Founder and former Chief Executive Travis Kalanick is leaving the company’s board effective Dec. 31 is a positive for the company, freeing its current management to strike their own path forward, Wedbush analyst Dan Ives said Tuesday.
Kalanick, who was forced out of the ride-sharing company UBER, +1.17% in 2017 amid a scandal about its aggressive culture and reports he had ignored allegations of sexual harassment, has been steadily selling his roughly $3 billion of stock since the lockup expiration freed him to do so, removing a major overhang, the analyst wrote in a note to clients. The entrepreneur has sold more than $2.5 billion of that total in recent weeks, according to the Wall Street Journal.
“Given the pace of his insider sales and other initiatives he has on the horizon, it makes sense for Uber and Kalanick to go their separate ways at this time as it would be a distraction in our opinion if he remained in the Board room going forward,” Ives wrote. “Many investors will be glad to see this dark chapter in the rear view mirror as the overhang from the lockup has been a lingering cloud over the Uber name over the past few months.”
See: Uber to pay $4.4 million in sexual harassment settlement
Uber stock “has been a nightmare” since its initial public offering in May, said Ives. The stock tumbled almost 8% in its first day of trade amid skepticism that its business model will allow it to ever post a profit. The stock is still 32% below its issue price of $45, after the company posted a net loss of $1.2 billion for the third quarter, following a $5.2 billion loss in the second quarter.
See also: China’s answer to WeWork files for IPO and it feels like deja-vu all over again
Ives remains bullish on the stock with an outperform rating and $45 price target. Uber has 100 million plus customers and “an unparalleled global monetization engine that is less than 3% penetrated today,” he wrote, which he expects will translate into improved growth metrics and profitability in 2021.
Read: This analysis of 40 million Uber rides reveals exactly how much people tip — and whether men or women are more generous
“While we remain positive Uber needs to execute flawlessly over the next 3-4 quarters and regain much-needed Street credibility,” the analyst wrote. “With ripping the band-aid off and Travis leaving stage left on the Board, we believe now it’s about (CE)) Dara (Khosrowshahi) & Co. taking Uber in the right direction for 2020 and beyond after a rough road so far.”
Ives is not the only Uber bull in the sell-side community. The average rating on the stock among analysts on FactSet is overweight, the equivalent of buy, with an average stock price target of $44.15. The same analysts are forecasting a full-year per-share loss of $6.44 for 2019, followed by a loss of $2.37 for 2020 and a loss of $1.58 for 2021.
Uber shares were up 1.3% Tuesday, but are down about 2% in the last three months, while the S&P 500 SPX, -0.04% has gained 9%.
Read now: Lyft’s rental-car plans broadside Hertz and Avis stocks