Investing in UBER: Evaluating the Long-Term Growth Case

Famous for ride-hailing service Uber Technologies (UBER) It has recently attracted a lot of attention from investors. The company, whose stock price has soared 130% over the past year and has nearly tripled since early 2023, hit a 52-week high of $82.14 last month as well.

What’s Driving Investor Interest in Uber Stock

Ridesharing giants like UBER have faced enormous challenges during the tumultuous COVID-19 pandemic. Due to persistent losses since its public debut in 2019, UBER faces a difficult road to financial stability.

Nonetheless, last year marked the company’s first major turning point. Achieve annual profitability and Added to S&P 500 Index, meeting the index’s criteria for positive returns in the most recent quarter. These two milestones triggered a significant surge in UBER’s stock price.

city Fiscal Year 2023, the company reported that revenue increased 16.9% year-over-year to $37.28 billion. Net income attributable to UBER was $1.89 billion and $0.87 per share, compared to net loss of $9.14 billion and $4.65 per share in the previous year.

Meanwhile, UBER’s revenue in the fourth quarter increased 15.4% year-over-year to $9.94 billion, higher than analyst estimates of $9.76 billion. Earnings per share were $0.66, up from $0.29 in the year-ago period and exceeding analyst estimates of $0.17.

UBER’s strategic response to remain viable during the pandemic included cost-cutting measures and a concerted effort to develop an emerging food delivery segment, which has since developed into a significant revenue stream.

In the fourth quarter of 2023, the company’s Delivery segment revenue was approximately $3.12 billion, up 6.4% year-over-year. At the same time, the mobility sector showed a notable increase of 33.9% compared to the previous year.

CEO Dara Khosrowshahi reflected on UBER’s fourth quarter results and 2023 performance, highlighting the company’s ability to continue meaningful and profitable growth. He pointed to the expansion and increased engagement of UBER’s audience, noting that the platform facilitated an average of approximately 26 million trips per day in 2023.

In the fourth quarter, the company’s total bookings reached $37.58 billion, up 22% year-over-year. Prashanth Mahendra-Rajah, UBER’s CFO, said the company’s record engagement and growth in total bookings in the fourth quarter were due to the strength of its platform and systematic investments in new growth avenues.

Additionally, management expects total bookings in the first quarter of fiscal 2024 to range from $37 billion to $38.5 billion and adjusted EBITDA to range from $1.26 billion to $1.34 billion.

conclusion

UBER has received significant attention from investors thanks to impressive revenue growth, stronger customer engagement, and notable profitability milestones. This remarkable resurgence from the challenges of 2020 highlights the company’s resilience and adeptness in navigating difficult circumstances.

In addition to the strong financial performance of the fourth quarter and full-year 2023 results, management’s confidence in UBER’s solid financial path was evident through the recent introduction of its first share repurchase program. Up to $7 billion repurchase The company’s common stock.

Meanwhile, Wall Street predicted that UBER’s sales and earnings per share in fiscal 2024 would be $43.34 billion and $1.24, respectively, an improvement of 16.3% and 42.4% compared to the previous year.

Additionally, as the company prepares to release its fiscal 2024 first quarter results next month, UBER Still one of the best choices According to JP Morgan analyst Doug Anmuth, CFA.

Anmuth is optimistic about UBER’s continued execution and revenue growth potential even after achieving milestones such as profitability and inclusion in the S&P 500.

With analysts optimistic about revenue growth, UBER’s forward non-GAAP PEG of 0.80x is approximately 51.9% lower than the industry average of 1.67, indicating the stock is reasonably priced.

UBER’s attractive valuation, impressive financial performance, and strategic initiatives position it as an attractive investment opportunity with strong long-term growth potential in the ridesharing and food delivery markets. As the company’s first quarter earnings release approaches, investing in UBER stock seems like a smart move for potential profits.