After posting massive losses quarter after quarter for years, Uber (NYSE:UBER) is now finally delivering for shareholders with massive cash flows and mushrooming profitability thanks in large part to strong Mobility and delivery demand from consumers.
After a slow 2024, the company again gained momentum and is recovering at a swift rate. In the year-to-date period, the stock has returned 21.1% and gained more than 180% in the past five years versus the market which remains under water for the year.
A tectonic shift in shareholder fortunes occurred when Uber turned profitable, but by how much and will it remain so?
The Old Uber Losing Billions Each Year Is Gone
Back in the days when CEO Travis Kalanick led Uber, the ride-hailing leader was plagued with employee scandals and weighed down by losses but now over 89% of the public is aware of the brand UBER. So much so in fact that it’s arguably a verb like “Google.”
Market share remains extraoardinary at 65% since 2017 thanks in large part to the early team’s efforts to go everywhere fast, meaning cement a presence in as many cities as possible as quickly as possible – hence the lack of profitability for years as investment dollars went to win market share. Uber’s plan to dominate cities from San Francisco to Dar es Salaam made it nigh impossible for competitors to catch up and now the fruits of those efforts are visible in the bottom line figures.
Monthly Active Platform Consumers (MAPCs) rose from 150 million in the fourth quarter of 2023 to 171 million in the same period of 2024. Trips carried out in the full-year 2024 surged by 19% from the prior year to 11.27 billion.
If we isolate our focus from the broader landscape to one aspect, like technology, Uber is still not short of advantages. Technology has remained at Uber’s core from the beginning. When it was established, the main goal of the leadership team was to offer a way to hail a ride using a mobile app. Since then it has expanded to services like food delivery and freight to diversify its revenue stream.
In spite of the run-up, Uber is currently trading at a reasonable forward sales of 2.68x and non-GAAP earnings of 19.77x.
Uber Lands Pilot Deal with US Army
The deal with the U.S. Army to broaden rideshare access for service members means military members will have a chance to make some extra cash on Army bases. It’s just a pilot program for now but if successful expect it to be rolled out nationwide.
CEO Dara and his team also took some bold steps towards futuristic transportation, such as with the availability of Waymo autonomous vehicle (AV) on the Uber app for Austin riders. The combination of Waymo’s technology and Uber’s proven platform is leading consumers toward an electric and autonomous transportation environment.
Uber’s partnership with Dubai’s Road and Transport Authority (RTA) and WeRide as the first technology partner aimed at enhancing autonomous vehicle access in Dubai also spotlights the ambition of Khosrowshahi and his team.
So far the playbook is paying off, as reflected by the consistently climbing revenues and gross booking that exceeded the company’s three-year outlook.
15,000 Reasons to Buy Uber
Operating in around 70 countries and over 15,000 cities worldwide, UBER has certainly garnered strong popularity around the world since its inception in 2010. Uber delivers a variety of solutions and offerings, predominantly in three segments: mobility, delivery, and freight, and the combination has led to steady eddy revenues that investors have really gravitated towards.
Till the fourth quarter of 2021, gross bookings and revenue from the Mobility and Delivery segments remained pretty much the same. Afterward, the gap between the sources widened with each quarter, with Mobility leading ahead and adding a larger chunk to the total revenue.
In the last reported quarter, i.e., the fourth quarter of 2024, total gross bookings of $44.20 billion and total revenue of $11.96 billion, the Mobility segment accounted for $22.80 billion gross bookings and $6.91 billion revenue, which collectively resulted in more than 50% of the gross output.
After swinging between profit and loss quarter after quarter, Uber’s profitability can also be seen to be moving in one direction, and fortunately, it is an optimistic one. The company’s net results have picked from a net loss of $654 million in the first quarter to a whopping $6.88 billion in the fourth quarter of 2024.
On a yearly basis too, the same trend persists; from the $6.77 billion net loss in 2020, Uber has grown strongly to product a net income of $9.86 billion. Another key remark for investors to take notice of is the company’s free cash flow, which was up 105% from the prior year to $6.89 billion for the full year 2024.
Is Uber Profitable?
Uber is now highly profitable after years of losses, and most recently posted earnings per share of $3.27.
Higher trip numbers and revenues, as well as encouraging profitability are all supporting demand for the stock and explain the extraordinary outperformance year-to-date.
Total gross bookings were up 18% year-over-year, out of which Mobility and Delivery Gross Bookings also rose by 18% from the prior year’s quarter.
Also, the company’s projections for the first quarter of 2025 added to the optimism around Uber’s prospects. Management anticipates gross bookings growth between 17% and 21% year-over-year, translating to reported gross bookings between $42 billion and $43.50 billion.
Uber Technologies remains a Buy, according to Wall Street analysts, who forecast a 38.1% upside in share price to the consensus target of $89.26 per share. Of the 42 analysts analyzing the stock, 34 suggested buying it.
With growing technology integration, consistent profitability, and the favorable dynamics of the ride-sharing market, Uber seems like a sound investment choice.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.
