When it comes to Uber’s (UBER) stock, traders should keep $36.08 top of mind.
That’s the all-time low the stock hit during the May 13 session, the second day of trading for the money-losing ride-hailing outfit. Since then, Uber’s shares touched a record high of $44.06 intraday on Thursday. The stock has outperformed the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 this week.
At $42.16 on Friday, Uber’s stock has given back a piece of those gains. But a 17% rally from the dark days of May 13 isn’t too shabby.
Some on Wall Street think a short-term bottom has formed in Uber. In part that could be due to traders finally getting a feel for how the stock acts and investors growing fearful of missing an Amazon-like opportunity. On the other hand, with trade war tensions between the U.S. and China running hot, Uber having a good chunk of its business domestically may win it a few fans on Wall Street.
“After a horror show in the first few days of its IPO, we believe the Street is starting to digest Uber as a stock with the valuation getting sea legs here,” Wedbush Securities analyst Dan Ives told Yahoo Finance. “We believe the smoke is clearing and in the near term the worst may be behind Uber as a stock.”
S3 Analytics’ Ihor Dusaniwsky — who closely tracks short-selling activity — told Yahoo Finance that he saw some short covering in Uber’s stock on Thursday. In total, the total number of Uber shares shorted fell 9% on the session.
While the initial thought is that the coast is clear on Uber’s stock, caution is likely still the correct way to go.
For one, Uber still has to reveal its latest quarterly earnings to an eager Wall Street — profits are not expected. Investors pounded Pinterest (PINS) management (the stock had rallied hard into the first earnings report) Friday for a lame earnings call and mixed first financial report card. The same could happen to Uber.
Moreover, post IPO lockup expirations about 180 days from now could weigh on Uber’s stock.
“I’m not sure if you can call this a signal for a short-term bottom, but more likely some of the shorter-term short sellers trying to exit their positions with a profit in hand,” Dusaniwsky said.
“It’s a long road ahead as this remains a ‘prove me’ stock in the eyes of the Street,” added Ives.
Friendly reminder: Uber’s stock is still trading below its $45 a share IPO price.
Brian Sozzi is an editor-at-large and co-host of Yahoo Finance The First Trade. Follow Brian Sozzi him on Twitter @BrianSozzi
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