Uber's Shares Decrease Based on Prospects. Should Investors Consider Purchasing Shares at Discounted Prices?
Uber, represented by its ticker symbol UBER, experienced a 7.6% dip on February 5 following its Q4 results. While the stock recovered later, it's still down approximately 20% from its peak as of now. Let's delve into Uber's recent performance to determine if investing in this industry leader is worthwhile.
A Closer Look at the Results
Uber's revenue surged 20% year over year to an impressive $12.0 billion in Q4, surpassing analyst predictions by $200 million. Revenue from mobility, including ride-sharing, skyrocketed 25% to $6.9 billion, while delivery revenue, fueled by Uber Eats, swelled 21% to $3.8 billion. Freight revenue, Uber's smallest sector, stayed steady at around $1.3 billion.
Gross bookings, which represent the total value of services transacted through Uber's platform, climbed 18% to $44.2 billion. Half of this growth came from mobility and delivery segments alike, while the number of trips increased 18% as well. Uber boasted a 14% increase in monthly active platform consumers.
Uber's profitability also saw a significant boost, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) soaring 44% to $1.8 billion.
Looking ahead, Uber estimates Q1 gross bookings between $42.0 billion to $43.5 billion, barely meeting analyst expectations. It predicts Q1's adjusted EBITDA to fall within the range of $1.79 billion to $1.89 billion, indicating a growth of 30% to 37%.
Uber remains optimistic about its three-year projection, targeting mid-teens to high-teens gross booking growth alongside a 30% to 40% profitability margin. However, it acknowledges facing pressure from increasing insurance costs, which it intends to mitigate through safety technology such as driver-insights dashboards.
Uber is teaming up with Alphabet's Waymo to introduce driverless ride-sharing vehicles in Austin and Atlanta during this year. Uber believes the technology is progressing but anticipates a lengthy commercialization process as hardware prices need to drop drastically. Uber estimates that within the following five years, autonomous driving could cater to 10% to 15% of the market before expanding further.
Time to Jump on the Bandwagon?
Uber confronts major uncertainties as the world pivots toward autonomous driving. Companies like Waymo and Tesla are already offering paid robotaxi rides, while Uber remains under scrutiny for its data usage.
Uber aims to position itself as a mediator in managing a network's everyday necessities, such as charging and cleaning, while running mixed fleets of cars with both human drivers and autonomous systems. This partnership with Waymo will shed light on Uber's longevity in the evolving ride-sharing market.
However, this transformation might take years to manifest. Uber's stock currently trades at a forward P/E ratio of 20 based on 2025 analyst estimates.
Uber has time to adapt to the evolving ride-sharing market, and its stock appears relatively affordable at the moment. Given its current trajectory, investors could enjoy stable returns before facing challenges from autonomous technology.
Considering Uber's robust Q4 financial performance with a 20% revenue increase and a significant boost in profitability, investing in this finance giant might be an attractive option for some. However, it's important to note the potential challenges associated with the shift towards autonomous driving and the company's reliance on data usage, which could impact its stock price. As Uber's stock currently presents a comparatively affordable forward P/E ratio, careful analysis and strategic timing could yield promising returns.