Without a doubt, Uber Technologies (UBER 2.45%) is one of the most disruptive and innovative businesses on the face of the planet. It upended the taxi industry, leveraging data, technology, and the internet to provide a superior use experience. Its success has resulted in a market cap of $185 billion today, a figure achieved in less than two decades.
Has this growth stock been good for investors? Let's take a closer look at Uber's performance over time.
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Uber is having a tremendous year
Over the last 12 months, shares of Uber have soared 35% (as of Dec. 9), a gain that comes up well ahead of the S&P 500's (^GSPC 1.27%) total return of 14%.
The stock has performed significantly better in the last three years. It skyrocketed 237% during that time, which would have turned a $10,000 starting investment into $33,700.
Over five years, Uber has climbed 68%, underperforming the broader index by a notable margin. This shows investors just how volatile things can be. Uber shares tanked 18% in 2021 and 41% in 2022, as unprofitable tech stocks temporarily fell out of favor amid inflationary pressures and rising interest rates.
NYSE: UBER
Key Data Points
Key metrics are strong, but there is long-term uncertainty
In general, though, Uber's stock price is trending in the right direction. And that's because the fundamentals are strong. The company's key metrics have all been robust.
For instance, Uber ended the third quarter with 189 million monthly active users, up 142% compared to the same period exactly five years ago. During that same stretch, gross bookings and revenue increased astronomically. This is clearly a more dominant business today, as it has a ride-hailing presence in 15,000 cities around the world and 9.4 million drivers and couriers on its platform.
What's more, Uber has morphed into a sustainably profitable company. Operating income totaled $1.1 billion in the third quarter, translating to an operating margin of 8.3%. The business reported $2.2 billion in free cash flow.
Uber's best trait is the presence of a network effect, allowing the mobility and delivery segments to get better as the user base grows. This places the company in an advantageous position as a partner of choice of autonomous vehicle enterprises that want to lean on Uber's technical expertise and direct connection with consumers.
However, it's difficult to say how things will shake out. Should Alphabet's Waymo or Tesla's robotaxi service rapidly scale and find adoption on their own, it could present challenges to Uber.
Nonetheless, Uber is an outstanding business. Investors might want to take a closer look.
