Uber Technologies Inc. (UBER) has seen its stock stagnate in recent months, largely due to concerns about the rise of autonomous vehicles.
Tesla’s announcement that it would begin production of its first robo-taxi in 2026 sent shockwaves through the industry, triggering fears that Uber’s ride-hailing dominance could be threatened. The stock initially tumbled 31% but has since stabilized, leaving investors wondering about its long-term prospects.
While autonomous vehicle development poses challenges, it could also present opportunities. Uber has already partnered with Waymo, Alphabet’s (GOOG) self-driving unit, in Atlanta and Austin. Instead of viewing autonomous vehicles as an existential threat, Uber could leverage its vast user base—more than 171 million active users worldwide—to integrate self-driving technology into its platform. If Uber can secure favorable partnerships, increased vehicle density could actually expand the ride-sharing market, rather than shrink it.
Diversification and Super App Ambitions
Uber is no longer just a ride-hailing company. The company generated over $44 billion in revenue in 2024, with more than half coming from rides and about a third from Uber Eats. Its advertising segment is also growing, with ad revenue running at an annualized rate in the low-single-digit billions. Despite concerns about slowing economic growth and potential tariff impacts, Uber has managed to maintain strong top-line growth, with management forecasting 19% gross bookings growth for Q1 2025.
Uber’s vision extends beyond transportation and food delivery. The company aspires to become a "super app," integrating travel bookings, logistics, and more. While its reported interest in acquiring Expedia did not materialize, even a minor entry into the travel sector could enhance its ecosystem. The company’s advertising business, which capitalizes on its large and engaged user base, also represents a significant untapped revenue source.
Uber is no longer just a ride-hailing company. The company generated over $44 billion in revenue in 2024, with more than half coming from rides and about a third from Uber Eats. Its advertising segment is also growing, with ad revenue running at an annualized rate in the low-single-digit billions. Despite concerns about slowing economic growth and potential tariff impacts, Uber has managed to maintain strong top-line growth, with management forecasting 19% gross bookings growth for Q1 2025.
Uber’s vision extends beyond transportation and food delivery. The company aspires to become a "super app," integrating travel bookings, logistics, and more. While its reported interest in acquiring Expedia did not materialize, even a minor entry into the travel sector could enhance its ecosystem. The company’s advertising business, which capitalizes on its large and engaged user base, also represents a significant untapped revenue source.
Financial Strength and Valuation Outlook
Despite recent volatility, Uber remains a free-cash-flow powerhouse. If revenue grows by 15% in 2025 as analysts predict, and operating expenses rise at a controlled 13% rate, free cash flow could expand 23% to $8.5 billion. This would provide Uber with the flexibility to repurchase shares and further enhance shareholder value.
Analysts remain bullish on Uber’s long-term potential. The company is projected to generate adjusted earnings of $3.06 per share in 2025 and $4.06 in 2026, reflecting a 33% earnings growth rate. At a valuation of 20.4 times expected 2025 free cash flow per share—only 4.5 points above the S&P 500’s multiple—Uber presents a compelling investment case.
While risks remain, including macroeconomic headwinds and regulatory challenges, Uber’s ability to navigate the evolving mobility landscape and leverage its diversified business model could position it as a long-term winner. Investors willing to weather short-term volatility may find an attractive entry point into a stock poised for continued growth.
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