Uber (NYSE:UBER) has been through quite a ride over the last year. The stock’s 52-week price peaked in October, but concerns surrounding Tesla’s announcement of its Cybercab caused a selloff that lasted more or less through the end of the year.
Since then, shares have gradually worked their way back up but are still down by over 5% in the last 12 months despite considerable revenue and earnings growth during that time. Let’s take a closer look at Uber to see if the stock is a buy, sell or hold at the moment.
Uber’s Revenues Soared 18%
While one might not guess it from looking at Uber’s share price, the company actually had quite a strong year in 2024.
Trailing 12-month revenues as of the end of Q4 were $43.98 billion, up 18.0% over the previous year. Earnings also advanced with EPS reaching $3.21 in the quarter ending on December 31st. For the full year, EPS came in at $4.56 compared to just $0.87 in 2023.
One factor in the recent earnings report that proved somewhat concerning for investors was a slated slowdown in Uber’s bookings. In Q4, gross bookings rose 18% year-over-year to $44.2 billion. Looking forward to Q1, management indicated a reduction in bookings to $42.0 billion to $43.5 billion. This translates to a year-over-year growth of 17 to 21% compared to Q1 2024.
Though a quarter-to-quarter slowdown in bookings likely is a fly in the ointment, it doesn’t represent a material or serious threat to Uber’s growth story.
How Is Uber’s Valuation Holding Up?
As a result of its lagging share price over the past year, Uber is priced at a fairly attractive level.
Though its price-to-sales and price-to-book ratios are somewhat high at 3.5 and 7.0, respectively, the price-to-earnings ratio is a relatively modest 15.9. It’s worth noting that this is a far lower multiple to earnings than the stock maintained in 2023 and early 2024, even though quarterly earnings have mushroomed.
Unsurprisingly, analysts see upside from Uber at these valuation levels. Ratings from analysts remain quite favorable. UBER’s current mix of ratings includes 33 Buys, 8 Holds and no Sells.
Is the Cybercab Really a Threat to Uber?
For all of the concern that Tesla’s autonomous taxi service has created among Uber investors, there are still many unanswered questions about it.
To start with, Tesla itself says the cabs will begin production sometime before 2027, likely meaning that its timeline sees them starting to roll off the line next year. The company, however, has a long history of overshooting its own timelines, especially when it comes to autonomous driving features. As such, there’s little to no guarantee that Cybercabs will actually start being produced anytime soon.
Even if Tesla can start producing the Cybercab on schedule, it will also face massive regulatory obstacles that could delay the introduction of an autonomous taxi service. The National Highway Traffic Safety Administration (NHTSA) caps deployment of vehicles without traditional human controls at 2,500 units per year.
Even if Tesla manages to clear the agency’s safety testing, therefore, it will still be very limited in its ability to introduce the cabs to the market. Even if this hurdle has been cleared, various state laws could present further difficulties. Overall, Tesla could be looking at years of regulatory obstruction before its Cybercab can be rolled out at scale.
In the meantime, Uber will likely operate with a nearly ironclad competitive moat. Uber commands around three-quarters of the rideshare market in the US, while Lyft still accounts for the remaining quarter.
Even if autonomous taxis are the future, though, Uber may very well still have a leg up on Tesla. It has partnered with AV company Waymo to develop its own autonomous cabs.
Unlike Tesla, though, Uber is already testing its AV taxis in real-world settings. Beginning in early March, Uber riders in the Austin market could choose to hail an autonomous Waymo cab. Though it’s only one test market, this puts the partnership between Uber and Waymo significantly out in front of Tesla when it comes to real-world deployment.
Uber’s EPS Set to Soar?
In addition to a solid moat and a valuation that leaves room for further upside, Uber also still has decent growth potential in front of it.
Despite Uber’s successes, nearly three-quarters of Americans still don’t use rideshare apps, creating a significant opportunity for reaching new customers.
Over the coming 3-5 years, analysts are expecting EPS to keep rising at an annualized rate of approximately 12%. Though weaker economic conditions could certainly slow this rate, Uber seems primed to boost earnings in the years to come.
Uber may also enjoy some degree of insulation from the effects of the tariff fears that have pummeled the stock market in general. As a service-focused business, the company’s exposure to import costs is limited. Customers who are accustomed to hailing rides may do so a bit less frequently to save money as the cost of goods rises, but it seems unlikely that Uber’s business model would be fundamentally challenged by the macroeconomic changes that are facing many other companies at the moment.
Is Uber Stock a Buy, Sell or Hold?
Uber is a Buy with the average analyst price target sitting at $88.78, almost 23% higher than the current share price.
All told, the events of the past year seem to have left Uber shares looking attractive at today’s prices. While it may eventually face competition from autonomous taxis, the main challenger still appears to be several years away from even having a chance to make a meaningful dent in Uber’s businesses. Although the expectations of slower booking growth are somewhat concerning, the company overall doesn’t appear to be in a bad position.
Perhaps most importantly, Uber has an effective lock on the ridesharing market that has become a key part of transportation in the US and in many parts of the world. The stock’s depressed prices, therefore, present a decent buying opportunity for long-term investors.
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.
