Uber stock closed slightly higher Thursday, after its chief financial officer gave reassuring commentary on the company's competitive position with the rise of self-driving vehicles. The stock sold off Wednesday after General Motors said it would wind down its Cruise self-driving taxi efforts.
Uber had previously reached a partnership with Cruise to offer robotaxis on its app starting in 2025. Uber stock closed Wednesday down 5.8%. About 20 minutes after markets closed Wednesday, Uber Chief Financial Officer Prashanth Mahendra-Rajah spoke at an investors conference hosted by Barclays and appeared to settle some jitters.
Shares of the ride-hailing company closed roughly a half-percent higher at 61.42 on the stock market today. Uber stock gained as much as 3% in earlier trading before pulling back.
Mahendra-Rajah, who stepped into the CFO role roughly one year ago, did not address the Cruise news directly but said Uber views itself as well-positioned to be a "demand aggregator" for makers of autonomous vehicles.
"Our view has not changed – that we believe the introduction of autonomous vehicles is going to be critical for us to be able to bring on continued supply, to grow with it," Mahendra-Rajah said.
Uber Stock Robotaxi Woes
But Wednesday's slide marked the second time the past seven days that Uber stock sold off in response to robotaxi-related news.
Shares sank more than 10% last Thursday, after Waymo announced it would expand its Waymo One app to Miami. Waymo has partnered with Uber to offer rides through the Uber app in Phoenix and for its upcoming expansions in Austin and Atlanta. So investors appeared startled when Uber was not mentioned in Waymo's announcement last week.
After that, the Cruise news added to fears that robotaxis could be a "winner take most" market dominated by the Alphabet owned Waymo and Tesla. Tesla is targeting next year to launch a ride-hailing service that will eventually be powered by its self-driving technology.
Mahendra-Rajah said so far Uber's November growth rate in San Francisco is "consistent with prior quarters" despite reports that Waymo is gaining market share in the city. He said Uber believes that robotaxis could be expanding the total addressable market.
Meanwhile, Uber's CFO added that the company has a huge user base and "very sophisticated algorithms" that match customers with ride and make sure vehicles are utilized as much as possible.
"If you want to maximize your earnings, you need to have passengers in your car as much as possible, and you need the most efficient way to operate that vehicle through that routing and that match," Mahendra-Rajah said.
He added that he believes Uber is going to "prove and deepen the partnership with Waymo, by proving our ability to run the fleet operations at a great level of efficiency, and also drive utilization of the vehicles at scale."
Uber CFO Bookings Commentary
Separately, Barclays analyst Ross Sandler noted during the interview with Mahendra-Raja that investors have also expressed concern about the pace of Uber's rides bookings growth in the recent quarter. The stock fell on a bookings miss when Uber gave its third-quarter results in late October.
But Mahendra-Raja said the company was up against some tougher year-over-year comparisons in recent quarters.
"From what we see today, the trajectory of Q4 and looking forward into 2025, (we) feel very comfortable that our mobility business is going to continue to be sort of a high teens, low 20s grower for at least the first few quarters of 2025," Mahendra-Raja said. "I'm reluctant to give a full year guide, so I wouldn't take this as guidance, but that's sort of where our view is how mobility is going to run out in '25."
AV Bear Case 'Tough To Fight' For Uber Stock
In the meantime, 2024 has been a rough year for Uber stock.
Shares entered trading Thursday down just under 1% year-to-date. That's a significant reversal after Uber's push to profitability and bookings growth powered a 150% rally in 2023.
RBC Capital analyst Brad Erickson, who rates Uber a buy, wrote early Thursday that the "AV bear case is proving a very tough narrative to fight at the moment" for both Uber and Lyft. The concerns have weighed on shares of both companies since Tesla Chief Executive Elon Musk first teased the company's robotaxi plan in the spring.
"The easy view here is that with only two companies (Tesla and Waymo) seemingly possessing the necessary tech to put AVs on the road any time soon, Uber's moat as an aggregator disappears (taken in isolation, we'd agree)," Erickson wrote. "With that said, the notion that this will be a two player market longer-term where broad-based adoption of robotaxi likely being 5-10 years away seems unlikely given AVs become existential for any other original equipment manufacturer and supplier over any medium/long-term time frame."
