Uber Technologies (UBER +2.35%) has been one of the most impressive turnaround stories in the stock market in recent years. The ridesharing giant went from a busted initial public offering (IPO) in 2019 to slogging through the pandemic.
At one point, the transportation stock was trading down more than 50% from its IPO price. However, CEO Dara Khosrowshahi, who was brought in eight years ago to help repair the brand, has streamlined the company by backing out of unprofitable markets, investing in tech improvements, launching the Uber One loyalty program, and leveraging the company's strengths as a provider of both ride-sharing and food delivery. He has also paid down debt and slashed expenses. As a result, the stock has tripled from its bottom in 2022.
After that bull run, is Uber poised for more gains or is the stock ready for a breather? Below, I'll take a look at where Uber is today to determine where it will be in a year.
Image source: Uber.
Uber's latest results
Despite economic volatility in recent quarters, Uber has continued to deliver strong results. In its third quarter, gross bookings jumped 21% to $49.7 billion, driving revenue up 20% to $13.47 billion, which topped the consensus estimate at $13.26 billion. Including 22% growth in trips to 3.5 billion, it was Uber's fastest quarterly growth since 2023.
On the bottom line, the company's results were also strong as adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 33% to $2.3 billion. Looking ahead to the fourth quarter, Uber expects that momentum to continue, forecasting growth of 17%-21% in gross bookings to $52.25 billion-$53.75 billion and adjusted EBITDA increasing $2.41 billion-$2.51 billion, up 31%-36% from the quarter a year ago.
Despite the strong results, Uber slipped on its earnings report as its generally accepted accounting principles (GAAP) operating profit grew just 5% to $1.1 billion, which included a $479 million charge for legal, tax, and regulatory reserve changes. By comparison, its EBITDA omitted that charge.
Since the report, the stock has continued to drift lower, seemingly on macroeconomic concerns as consumer sentiment is weakening, the labor market is struggling, and lower-income consumers are showing signs of strain. Uber's business is dependent on the health of the global economy, as the company depends on discretionary spending for rides and food delivery. If consumers feel less confident in the economy, they're likely to pull back on spending on Uber.
NYSE: UBER
Key Data Points
The next year for Uber
Uber's momentum seems squarely on the right track, as Uber One is driving cross-booking growth, with especially strong growth in its delivery business. The company also said it would begin giving adjusted earnings-per-share (EPS) guidance in the first quarter of 2026, moving away from adjusted EBITDA. This seems like a smart move and shows the business has matured to a point where it can confidently report an adjusted profit without the additional adjustments that are included in EBITDA.
However, the company is sensitive to the global economy, and about half its revenue comes from North America. In other words, a recession or an intensifying slowdown could hurt the business.
The company has formed a number of partnerships with AV platforms like Waymo, but autonomous ride-sharing could be a challenge for Uber because it undermines the advantage it has with its driver network.
That's not the only risk facing Uber as transportation continues to evolve. Companies like Archer Aviation and Joby Aviation are trying to make urban air taxis a reality, and Uber still faces competition from ridesharing companies like Lyft, Grab, and Didi.
Valuing Uber isn't easy, as there are many special items, including its minority stakes in other businesses and fluctuations in taxes. However, the company is now trading at roughly 20 times adjusted EBITDA, which seems reasonable for a stock with Uber's growth potential.
Barring increasing macro challenges, Uber looks poised to gain over the next year, though investors shouldn't ignore long-term risks around autonomous-vehicle ridesharing and other changes in the transportation industry.
