San Francisco, CA-based ride-sharing giant Uber Technologies has swiftly climbed the financial ladder lately. In the most recent trio of trading days, the stock has flirted with the $82/share mark, culminating at $83.2 on a recent Tuesday, trailing only slightly behind its all-time peak of $87, scaled just days prior.
The Driving Forces Behind Uber’s Soaring Stock
Uber’s shares saw a meteoric 10.8% rise on October 11, hot on the heels of Tesla‘s somewhat underwhelming robotaxi event. The less-than-thrilling revelation on Tesla’s much-hyped robotaxi lacked crucial specifics about the prospective ridesharing app. This anticlimax not only nudged Uber ahead, but also spurred a rally in shares of fellow ride-sharing entity Lyft.
The tech behemoth Tesla’s failure to deliver as expected inadvertently quelled the imminent threat it posed to established ride-sharing companies. Uber’s own autonomous vehicle (AV) program had previously hit a roadblock in Arizona following a tragic pedestrian fatality in 2018. However, Uber has since executed a strategic turnaround, teaming up with tech titans like Alphabet‘s Waymo and General Motors’ Cruise to embed autonomous vehicles on its platform. The recent collaboration with AV startup Avride in Austin, TX underscores Uber’s proactive stance in neutralizing competitor threats.
Uber’s shares have outperformed expectations this year, eclipsing its industry and securing a coveted spot in the S&P 500 index in December 2023.
Year-to-Date Price Surge
Image Source: Zacks Investment Research
Uber’s stocks continue to surge above the 50-day and 200-day moving averages, signaling a bullish trajectory in the market.
Image Source: Zacks Investment Research
Positive Outlook on Uber’s Earnings Revisions
The multi-faceted company, offering ride-hailing, food delivery, and freight services under its Mobility, Delivery, and Freight segments, has exceeded the Zacks Consensus Estimate in half of the past four quarters, posting an average earnings surprise of 29%. Uber is currently witnessing optimistic estimate revisions for 2024 and 2025.
Image Source: Zacks Investment Research
Further Indicators Supporting an UBER Investment
Commendable Expansion Initiatives: Uber’s foray into food delivery and freight services alongside core ride-sharing operations showcases its diversification prowess. With a keen eye on strategic acquisitions, geographic expansions, and product innovations, Uber’s global footprint stands strengthened due to these agile business maneuvers.
Cost-Efficiency Initiatives: Uber’s disciplined spending and cost-management strategies are steering it toward bottom-line growth. The company’s projected long-term earnings growth rate of 53.2% outshines the industry’s 24.8% threshold.
Strategic Segments Performance: Uber’s ride-sharing and delivery platforms are experiencing a surge in demand, supported by novel growth ventures and sustained fiscal prudence. Gross bookings in the previous quarter soared 19% year-over-year to $40 billion, with trips registering a robust 21% increase to 2.8 billion. These positive trends are anticipated to persist in the current quarter, with Uber eyeing gross bookings between $40.25 billion and $41.75 billion, implying a forthcoming year-over-year growth in the 18-23% range.
Vigorous Share Repurchase: Bolstered by a robust operating cash flow of $1.8 billion in the second quarter of 2024 (a 53% year-over-year upturn), Uber initiated share repurchases, approving an allocation of up to $7 billion for buybacks earlier this year.
Driving Towards Greater Heights with UBER
The consensus target price for UBER stock sits at $88.48 per share, suggesting a potential upside exceeding 4% from current levels. Despite nearing its all-time pinnacle, this juncture may present an advantageous window to invest in UBER, given the myriad tailwinds propelling the stock’s trajectory, along with buoyant estimate revisions. Projections for 2024 illustrate a 16.5% uptick in sales and a 24.1% surge in EPS, underscoring a bright growth outlook for the company.
Backed by a Zacks Rank #2 (Buy) and an impressive A VGM Score, UBER stock epitomizes a promising venture amidst the current market landscape.