Should you buy this amazing growth stock now for $100?

uber (Uber 1.10%) The stock has soared 218% since the start of 2023 and is riding a fast pace, well outpacing its broader range. Nasdaq Composite index.

this growth technology stocks It’s currently trading at price to sales ratio 4.4 of. This is not a valuation as attractive as the 1.5x the stock holds in early 2023. It would be accurate to assume that the business is benefiting from strong investor enthusiasm, aided by favorable market conditions.

Then investors still buy uber stock Should you take $100 now or wait for a better opportunity?

Is this a quality business?

Before buying stock in any company, especially with the hope of owning it for more than five years, investors should make an effort to find out whether the company they are considering is of good quality. There are many factors to look at when making an informed assessment.

I believe Uber fits the bill here. The company dominates the industry thanks to its first-mover advantage. To give you an idea of ​​Uber’s sheer scale, it operates in more than 10,000 cities around the world. Globally, Uber has a 25% share of the ridesharing and taxi service market. In the US, the market share is much higher at 75%.

In the fourth quarter of 2023, Uber reported that 150 million monthly active users completed 2.6 billion trips and spent $38 billion over the three-month period. Operating a multi-faceted platform where these kinds of monster figures can be uploaded gives Uber a powerful network effect. This moat protects your business from threats from competitive forces, whether existing industry competitors or new entrants.

I think a good company should also have solid growth prospects. In the past, this wasn’t an issue for Uber. Despite the massive disruption caused by the coronavirus pandemic, Uber’s 2023 revenue will total $37 billion, a 164% increase over 2019.

To further accelerate this growth, Uber plans to expand into new areas such as advertising, Uber Health, and Uber for Business, in addition to simply adding more users across its platform. There are also many opportunities to drive more Uber One memberships.

Wall Street believes Uber’s revenue will grow at a CAGR of 15.7% over the next three years. And considering the company’s improving profitability, analysts think: Earnings per share It will soar by an average of 48% per year during that period.

This is no longer a money-losing task. Uber generated $3.3 billion in free cash flow in 2023. Now that it has such massive scale, investors can expect this to be the norm.

threat of chaos

Despite its favorable characteristics, it is always a smart idea to understand what factors may hinder Uber’s continued success. i believe there is One of the important terminal risk factors You can’t just ignore that.

There’s no telling if or when this will become a reality, but the prospect of fully self-driving car software poses a serious threat to Uber. Either that tesla, alphabetWaymo or general motorsWhoever develops this technology first could launch a driverless taxi service that could rival what Uber currently offers, Cruz said.

From a rider’s perspective, this will be a welcome development. The biggest cost factor for a typical trip is the driver. In theory, eliminating this stakeholder would make the ride much cheaper.

Luckily, Uber executives aren’t sitting idly by. They are trying to position their business for whatever technological changes may occur in the future. That’s why Uber has partnered with Waymo to allow the autonomous service to offer trips on its ride-hailing app. What trajectory this technology will take over the next decade is anyone’s guess.

However, if you still think this is a good business considering these potential risks, now is the time to buy the stock.