Uber Technologies (UBER +0.22%) is the defining business in the gig-economy era. It rode the wave of smartphone penetration and better internet connectivity, as well as a desire for greater flexibility from drivers and riders, to achieve monster success in the past decade. Shares have been on fire, with prices soaring 220% just in the past three years (as of Dec. 22).
Should you invest $1,000 in this growth stock right now?
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Uber's network effect is strengthening
Investors who consider adding Uber to their portfolios are certainly making a smart move. The business possesses a powerful network effect, thanks to its two-sided mobility platform and three-sided delivery ecosystem. More stakeholders boost the value proposition, elevating the company's competitive position.
Uber's monthly active users increased 17% year over year in the third quarter to 189 million (as of Sept. 30), with revenue up 20% and free cash flow totaling $2.2 billion. Uber facilitated 3.5 billion trips in the last three months.
NYSE: UBER
Key Data Points
The stock is taking a breather
After hitting a peak price of $100.10 on Oct. 6, Uber shares are cooling down a bit. They currently trade 21% off that all-time high. This gives those with $1,000 (or any amount really) available to invest a good opportunity to buy the stock, especially since it's selling at a compelling price-to-earnings ratio of only 10.2. That multiple has contracted by 23% this year.
Uber's ability to grow its earnings rapidly is noteworthy, and it's precisely what should lift the stock over the next five years.
