One of last year's biggest broken IPOs was Uber (NYSE:UBER), which shed a little more than a third of its value in 2019 after hitting the market at $45 in its springtime IPO. It's been driving in the right direction this year, up 39% through Wednesday's close. 

Accelerating top-line growth since going public, smart promotional activity, and a blowout fourth quarter as it steers toward what is now inevitable profitability are turning Uber stock from last year's dog to this year's best in show. Let's take a closer look at what the bears got wrong about Uber.

An Uber driver at night with an illuminated Uber beacon on the windshield.

Image source: Uber Technologies.

Every top dog has its day

Never underestimate a market leader in a booming industry. Uber and smaller rival Lyft (NASDAQ:LYFT) may have been ridiculed as debutantes last year for their 10-digit annual deficits and their outlandish valuations out of the gate, but it's a different story these days. 

Uber may have disappointed investors last summer by posting a mere 14% increase in revenue in its first quarterly earnings release as a public company, but that pace picked up to 30% in the third quarter and is now at 37% in this month's fourth-quarter report. Its namesake ride-hailing service is also blowing up in one important profitability dipstick, as adjusted EBITDA in its personal mobility segment soared 21% to a beefy $742 million in the fourth quarter. Personal mobility -- or rides, as Uber is now calling the segment -- accounts for 75% of its gross bookings and reported revenue.

We're now at the point where the positive adjusted EBITDA in rides is enough to cover its corporate overhead. The only reason that total adjusted EBITDA is negative -- though improving -- is the losses in Uber Eats, smaller bets, and big investments in self-driving technology. You don't want Uber to actually abandon those longer-term plays, do you? You want Uber to be leveraging its platform in new and exciting ways. With 111 million monthly active platform consumers at the start of this year, it makes sense to dabble into freight logistics and restaurant delivery even if they're not profitable at the moment.

Speaking specifically to Uber Eats, total adjusted EBITDA would have gone from a deficit of $539 million in the fourth quarter of 2018 to a mere $154 million hole a year later if the food-delivery business hadn't been on the books. However, Uber Eats -- a business that smaller rival Lyft has no interest in challenging -- serves an important role here. On the consumer front, folks who lean on Uber and Uber Eats are far more active than those relying solely on the personal mobility service. On the driver end, Uber Eats opens up its driver pool to folks with older cars that wouldn't meet Uber's standards for driving people around. 

We're also in the process of a shakeout in the third-party delivery app market. Uber Eats will benefit as weaker players bow out, as its parent will be able to ease up on the promotional activities weighing on the segment's profitability. All of this will lead to the rationality in discounting practices that is already finding some analysts who were initially pessimistic about Uber changing their tunes in 2020. 

Uber has put its early public shareholders through a lot in its first nine months of trading. No one said that investing in IPOs would be easy. However, with Uber making strides in tearing down last year's bearish arguments, the early rally of 2020 could be the new normal.