/Uber%20Technologies%20Inc%20logo%20on%20phone-by%20DenPhotos%20via%20Shutterstock.jpg)
Uber Technologies (UBER) began as a convenient, app-based ride-hailing service, and is now slowly growing into a global tech giant. Its operations now include food delivery, freight transportation, and even autonomous driving technologies. Initially, Uber's stock struggled to gain traction, reflecting investor concerns about the company's ability to achieve profitability.
However, Uber has now solved the problem. In fact, reporting profits for four consecutive quarters helped to earn the company a place in the S&P 500 Index ($SPX).
And aside from the popular artificial intelligence (AI)-powered stocks, UBER was among the best-performing stocks last year. The ride-hailing stock rose a mind-blowing 148.9%, wildly outperforming the S&P 500’s gain of 25%.
Valued at $148.5 billion, UBER stock is up 14.8% YTD, right in line with the broader market. Let's see what Wall Street predicts for UBER stock next.
Uber is Experiencing Rapid Growth
Uber has evolved to include delivery, freight, and health with Uber Ride, Drive, Eats, Freight, Business, and Health. Uber now operates in 70 countries and 10,000 cities.
Over the past few years, Uber has made notable strides in improving its financial health, reflecting its robust market position. In the most recent first quarter, gross bookings increased 20% year-over-year to $37.7 billion. This led to a total revenue increase of 15% to $10.1 billion, beating the consensus estimate by $40.2 million.
Total trips in the quarter grew 21% to 2.6 billion. In Q1, freight revenue declined 8%, while combined mobility and delivery revenue rose 19%.
Uber reported 149 million in monthly active platform consumers, reflecting growth of 15% year-over-year. In Q4, 2023, Uber hit a $900 million run rate for its advertising business. The company targets achieving a $1 billion run rate in its advertising business by this year.
The company ended the quarter with $5.8 billion in unrestricted cash, cash equivalents, and short-term investments. Uber also reported a massive free cash flow balance of $1.4 billion, which should allow the company to fund its aggressive growth strategies while also reducing its debt.
While Uber resolved its profitability issues last year, the company reported a net loss of $654 million due to "net unrealized losses related to the revaluation of Uber's equity investments." However, adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) increased 82% year on year to $1.4 billion.
Uber's investments in technology, particularly in autonomous vehicles and AI, could give it a competitive advantage and reduce reliance on human drivers.
Management is also expanding its food delivery business. Recently, Uber announced its decision to acquire Delivery Hero SE’s foodpanda delivery business in Taiwan. The $950 million cash deal is expected to close in the first half of 2025. Before this, Uber formed a strategic partnership with Instacart (CART), allowing its customers to order from Uber Eats-powered restaurants through the Instacart app.
Analysts who follow UBER stock expect revenue to increase by 15.8% in 2024, and grow by another 15.7% in 2025. Analysts also expect Uber to report a profit of $0.90 per share in 2024, with EPS further rising to $2.10 in 2025.
Uber’s high operating expenses and aggressive expansion strategies have restricted it from achieving consistent profitability, which might be a concern in the short term. However, if you have a long-term investment horizon, this is not unusual for a growing company. Overall, the company is a great business and its strategic initiatives and adaptability set it up for future success.
What Does Wall Street Say About Uber Stock?
Analysts continue to be optimistic about Uber's stock future, citing the company's improving financial position and robust expansion strategies. Piper Sandler analyst Alexander Potter recently reiterated his "buy" rating on UBER stock, with a price target of $88.
Similarly, Wells Fargo analyst Ken Gawrelski maintained a “buy,” setting a target price of $91.
Overall, on Wall Street, UBER stock is a "strong buy.” Of the 40 analysts covering UBER, 35 have rated it a “strong buy,” three have a “moderate buy” recommendation, and two suggest a “hold.” Its mean price target of $86.79 implies the stock could climb as high as 22.8% from current levels.
The Bottom Line on UBER Stock
UBER has a high target price of $145, implying a potential 105.2% gain over the next 12 months. The stock gained nearly 149% last year, so this is not an impossible goal - especially now that the company has started generating profits.
Uber is undoubtedly a great growth stock to invest in right now, thanks to its smart business model, strong financial health, and ability to innovate and adapt. However, at 33.7x forward 2025 earnings, the stock appears to be expensive at current levels. Given that, it could be best to wait for a pullback, or start with a small investment.
On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
