Uber Technologies Inc. (NYSE:UBER)

Capital Asset Pricing Model (CAPM)

Capital asset pricing model (CAPM) indicates what should be the expected or required rate of return on risky assets like Uber Technologies Inc. common stock.

Rates of Return
Variance and Covariance
Systematic Risk (β) Estimation
Expected Rate of Return

Rates of Return

Uber Technologies Inc., monthly rates of return

		Uber Technologies Inc. (UBER)			Standard & Poor’s 500 (S&P 500)
t	Date	Price_UBER,t¹	Dividend_UBER,t¹	R_UBER,t²	Price_{S&P 500,t}	R_{S&P 500,t}³
	May 31, 2019	$40.41			2,752.06
1.	Jun 30, 2019	$46.38		14.77%	2,941.76	6.89%
2.	Jul 31, 2019	$42.14		-9.14%	2,980.38	1.31%
3.	Aug 31, 2019	$32.57		-22.71%	2,926.46	-1.81%
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54.	Nov 30, 2023	$56.38		30.27%	4,567.80	8.92%
55.	Dec 31, 2023	$61.57		9.21%	4,769.83	4.42%
Average (R):				1.68%		1.15%
Standard deviation:				14.05%		5.38%

		Uber Technologies Inc. (UBER)			Standard & Poor’s 500 (S&P 500)
t	Date	Price_UBER,t¹	Dividend_UBER,t¹	R_UBER,t²	Price_{S&P 500,t}	R_{S&P 500,t}³
	May 31, 2019	$40.41			2,752.06
1.	Jun 30, 2019	$46.38		14.77%	2,941.76	6.89%
2.	Jul 31, 2019	$42.14		-9.14%	2,980.38	1.31%
3.	Aug 31, 2019	$32.57		-22.71%	2,926.46	-1.81%
4.	Sep 30, 2019	$30.47		-6.45%	2,976.74	1.72%
5.	Oct 31, 2019	$31.50		3.38%	3,037.56	2.04%
6.	Nov 30, 2019	$29.60		-6.03%	3,140.98	3.40%
7.	Dec 31, 2019	$29.74		0.47%	3,230.78	2.86%
8.	Jan 31, 2020	$36.29		22.02%	3,225.52	-0.16%
9.	Feb 29, 2020	$33.87		-6.67%	2,954.22	-8.41%
10.	Mar 31, 2020	$27.92		-17.57%	2,584.59	-12.51%
11.	Apr 30, 2020	$30.27		8.42%	2,912.43	12.68%
12.	May 31, 2020	$36.32		19.99%	3,044.31	4.53%
13.	Jun 30, 2020	$31.08		-14.43%	3,100.29	1.84%
14.	Jul 31, 2020	$30.26		-2.64%	3,271.12	5.51%
15.	Aug 31, 2020	$33.63		11.14%	3,500.31	7.01%
16.	Sep 30, 2020	$36.48		8.47%	3,363.00	-3.92%
17.	Oct 31, 2020	$33.41		-8.42%	3,269.96	-2.77%
18.	Nov 30, 2020	$49.66		48.64%	3,621.63	10.75%
19.	Dec 31, 2020	$51.00		2.70%	3,756.07	3.71%
20.	Jan 31, 2021	$50.93		-0.14%	3,714.24	-1.11%
21.	Feb 28, 2021	$51.75		1.61%	3,811.15	2.61%
22.	Mar 31, 2021	$54.51		5.33%	3,972.89	4.24%
23.	Apr 30, 2021	$54.77		0.48%	4,181.17	5.24%
24.	May 31, 2021	$50.83		-7.19%	4,204.11	0.55%
25.	Jun 30, 2021	$50.12		-1.40%	4,297.50	2.22%
26.	Jul 31, 2021	$43.46		-13.29%	4,395.26	2.27%
27.	Aug 31, 2021	$39.14		-9.94%	4,522.68	2.90%
28.	Sep 30, 2021	$44.80		14.46%	4,307.54	-4.76%
29.	Oct 31, 2021	$43.82		-2.19%	4,605.38	6.91%
30.	Nov 30, 2021	$38.00		-13.28%	4,567.00	-0.83%
31.	Dec 31, 2021	$41.93		10.34%	4,766.18	4.36%
32.	Jan 31, 2022	$37.40		-10.80%	4,515.55	-5.26%
33.	Feb 28, 2022	$36.03		-3.66%	4,373.94	-3.14%
34.	Mar 31, 2022	$35.68		-0.97%	4,530.41	3.58%
35.	Apr 30, 2022	$31.48		-11.77%	4,131.93	-8.80%
36.	May 31, 2022	$23.20		-26.30%	4,132.15	0.01%
37.	Jun 30, 2022	$20.46		-11.81%	3,785.38	-8.39%
38.	Jul 31, 2022	$23.45		14.61%	4,130.29	9.11%
39.	Aug 31, 2022	$28.76		22.64%	3,955.00	-4.24%
40.	Sep 30, 2022	$26.50		-7.86%	3,585.62	-9.34%
41.	Oct 31, 2022	$26.57		0.26%	3,871.98	7.99%
42.	Nov 30, 2022	$29.14		9.67%	4,080.11	5.38%
43.	Dec 31, 2022	$24.73		-15.13%	3,839.50	-5.90%
44.	Jan 31, 2023	$30.93		25.07%	4,076.60	6.18%
45.	Feb 28, 2023	$33.26		7.53%	3,970.15	-2.61%
46.	Mar 31, 2023	$31.70		-4.69%	4,109.31	3.51%
47.	Apr 30, 2023	$31.05		-2.05%	4,169.48	1.46%
48.	May 31, 2023	$37.93		22.16%	4,179.83	0.25%
49.	Jun 30, 2023	$43.17		13.81%	4,376.86	4.71%
50.	Jul 31, 2023	$49.46		14.57%	4,588.96	4.85%
51.	Aug 31, 2023	$47.23		-4.51%	4,507.66	-1.77%
52.	Sep 30, 2023	$45.99		-2.63%	4,288.05	-4.87%
53.	Oct 31, 2023	$43.28		-5.89%	4,193.80	-2.20%
54.	Nov 30, 2023	$56.38		30.27%	4,567.80	8.92%
55.	Dec 31, 2023	$61.57		9.21%	4,769.83	4.42%
Average (R):				1.68%		1.15%
Standard deviation:				14.05%		5.38%

Show all

¹ Data in US$ per share of common stock, adjusted for splits and stock dividends.

² Rate of return on common stock of UBER during period t

³ Rate of return on S&P 500 (the market portfolio proxy) during period t

Variance and Covariance

Uber Technologies Inc., calculation of variance and covariance of returns

t	Date	R_UBER,t	R_{S&P 500,t}	(R_UBER,t–R_UBER)²	(R_{S&P 500,t}–R_{S&P 500})²	(R_UBER,t–R_UBER)×(R_{S&P 500,t}–R_{S&P 500})
1.	Jun 30, 2019	14.77%	6.89%	171.40	33.01	75.22
2.	Jul 31, 2019	-9.14%	1.31%	117.15	0.03	-1.79
3.	Aug 31, 2019	-22.71%	-1.81%	594.95	8.74	72.12
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54.	Nov 30, 2023	30.27%	8.92%	817.19	60.38	222.12
55.	Dec 31, 2023	9.21%	4.42%	56.61	10.73	24.64
Total (Σ):				10,652.59	1,563.23	2,089.17

t	Date	R_UBER,t	R_{S&P 500,t}	(R_UBER,t–R_UBER)²	(R_{S&P 500,t}–R_{S&P 500})²	(R_UBER,t–R_UBER)×(R_{S&P 500,t}–R_{S&P 500})
1.	Jun 30, 2019	14.77%	6.89%	171.40	33.01	75.22
2.	Jul 31, 2019	-9.14%	1.31%	117.15	0.03	-1.79
3.	Aug 31, 2019	-22.71%	-1.81%	594.95	8.74	72.12
4.	Sep 30, 2019	-6.45%	1.72%	66.08	0.33	-4.64
5.	Oct 31, 2019	3.38%	2.04%	2.89	0.80	1.52
6.	Nov 30, 2019	-6.03%	3.40%	59.50	5.09	-17.41
7.	Dec 31, 2019	0.47%	2.86%	1.46	2.93	-2.07
8.	Jan 31, 2020	22.02%	-0.16%	413.82	1.72	-26.66
9.	Feb 29, 2020	-6.67%	-8.41%	69.72	91.37	79.82
10.	Mar 31, 2020	-17.57%	-12.51%	370.51	186.59	262.93
11.	Apr 30, 2020	8.42%	12.68%	45.36	133.09	77.70
12.	May 31, 2020	19.99%	4.53%	335.08	11.43	61.88
13.	Jun 30, 2020	-14.43%	1.84%	259.50	0.48	-11.13
14.	Jul 31, 2020	-2.64%	5.51%	18.66	19.03	-18.85
15.	Aug 31, 2020	11.14%	7.01%	89.40	34.32	55.40
16.	Sep 30, 2020	8.47%	-3.92%	46.15	25.71	-34.44
17.	Oct 31, 2020	-8.42%	-2.77%	101.95	15.32	39.52
18.	Nov 30, 2020	48.64%	10.75%	2,204.92	92.29	451.10
19.	Dec 31, 2020	2.70%	3.71%	1.03	6.58	2.61
20.	Jan 31, 2021	-0.14%	-1.11%	3.31	5.11	4.11
21.	Feb 28, 2021	1.61%	2.61%	0.01	2.14	-0.10
22.	Mar 31, 2021	5.33%	4.24%	13.34	9.59	11.31
23.	Apr 30, 2021	0.48%	5.24%	1.45	16.77	-4.93
24.	May 31, 2021	-7.19%	0.55%	78.77	0.36	5.32
25.	Jun 30, 2021	-1.40%	2.22%	9.48	1.15	-3.31
26.	Jul 31, 2021	-13.29%	2.27%	224.09	1.27	-16.87
27.	Aug 31, 2021	-9.94%	2.90%	135.06	3.07	-20.35
28.	Sep 30, 2021	14.46%	-4.76%	163.31	34.87	-75.46
29.	Oct 31, 2021	-2.19%	6.91%	14.97	33.25	-22.31
30.	Nov 30, 2021	-13.28%	-0.83%	223.90	3.92	29.64
31.	Dec 31, 2021	10.34%	4.36%	75.01	10.33	27.83
32.	Jan 31, 2022	-10.80%	-5.26%	155.88	41.04	79.98
33.	Feb 28, 2022	-3.66%	-3.14%	28.57	18.35	22.90
34.	Mar 31, 2022	-0.97%	3.58%	7.04	5.90	-6.45
35.	Apr 30, 2022	-11.77%	-8.80%	180.98	98.87	133.77
36.	May 31, 2022	-26.30%	0.01%	783.10	1.31	31.97
37.	Jun 30, 2022	-11.81%	-8.39%	182.03	91.01	128.71
38.	Jul 31, 2022	14.61%	9.11%	167.24	63.42	102.99
39.	Aug 31, 2022	22.64%	-4.24%	439.42	29.07	-113.02
40.	Sep 30, 2022	-7.86%	-9.34%	91.01	109.98	100.05
41.	Oct 31, 2022	0.26%	7.99%	2.01	46.77	-9.69
42.	Nov 30, 2022	9.67%	5.38%	63.86	17.87	33.78
43.	Dec 31, 2022	-15.13%	-5.90%	282.76	49.63	118.46
44.	Jan 31, 2023	25.07%	6.18%	547.05	25.28	117.59
45.	Feb 28, 2023	7.53%	-2.61%	34.24	14.13	-22.00
46.	Mar 31, 2023	-4.69%	3.51%	40.60	5.56	-15.02
47.	Apr 30, 2023	-2.05%	1.46%	13.93	0.10	-1.18
48.	May 31, 2023	22.16%	0.25%	419.28	0.81	-18.42
49.	Jun 30, 2023	13.81%	4.71%	147.22	12.72	43.27
50.	Jul 31, 2023	14.57%	4.85%	166.12	13.68	47.67
51.	Aug 31, 2023	-4.51%	-1.77%	38.32	8.52	18.07
52.	Sep 30, 2023	-2.63%	-4.87%	18.55	36.24	25.93
53.	Oct 31, 2023	-5.89%	-2.20%	57.37	11.19	25.34
54.	Nov 30, 2023	30.27%	8.92%	817.19	60.38	222.12
55.	Dec 31, 2023	9.21%	4.42%	56.61	10.73	24.64
Total (Σ):				10,652.59	1,563.23	2,089.17

Show all

Variance_UBER = Σ(R_UBER,t–R_UBER)² ÷ (55 – 1)
= 10,652.59 ÷ (55 – 1)
= 197.27

Variance_{S&P 500} = Σ(R_{S&P 500,t}–R_{S&P 500})² ÷ (55 – 1)
= 1,563.23 ÷ (55 – 1)
= 28.95

Covariance_{UBER, S&P 500} = Σ(R_UBER,t–R_UBER)×(R_{S&P 500,t}–R_{S&P 500}) ÷ (55 – 1)
= 2,089.17 ÷ (55 – 1)
= 38.69

Systematic Risk (β) Estimation

Variance_UBER	197.27
Variance_{S&P 500}	28.95
Covariance_{UBER, S&P 500}	38.69
Correlation coefficient_{UBER, S&P 500}¹	0.51
β_UBER²	1.34
α_UBER³	0.15%

Calculations

¹ Correlation coefficient_{UBER, S&P 500}
= Covariance_{UBER, S&P 500} ÷ (Standard deviation_UBER × Standard deviation_{S&P 500})
= 38.69 ÷ (14.05% × 5.38%)
= 0.51

² β_UBER
= Covariance_{UBER, S&P 500} ÷ Variance_{S&P 500}
= 38.69 ÷ 28.95
= 1.34

³ α_UBER
= Average_UBER – β_UBER × Average_{S&P 500}
= 1.68% – 1.34 × 1.15%
= 0.15%

Expected Rate of Return

Assumptions
Rate of return on LT Treasury Composite¹	R_F	4.72%
Expected rate of return on market portfolio²	E(R_M)	13.44%
Systematic risk (β) of Uber Technologies Inc. common stock	β_UBER	1.34

Expected rate of return on Uber Technologies Inc. common stock³	E(R_UBER)	16.37%

¹ Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

² See details »

³ E(R_UBER) = R_F + β_UBER [E(R_M) – R_F]
= 4.72% + 1.34 [13.44% – 4.72%]
= 16.37%