Uber Technologies, Inc. (UBER) stock has soared over 90% in 2023 as Wall Street cheers its growth, strong management, and its race toward sustainable profitability.
Uber shares touched fresh 52-week highs on Thursday, July 27 heading into the release of its second quarter financial results on August 1.
The Uber Basics
Uber is still looking to a future where fleets of its autonomous vehicles drive people around cities, deliver food, and transport goods. In fact, Uber in late May announced a new multi-year strategic partnership with Waymo for autonomous driving, bringing together its “world-leading autonomous driving technology with the massive scale of Uber’s ridesharing and delivery networks.”
Uber’s CEO Dara Khosrowshahi said at the time that: “Fully autonomous driving is quickly becoming part of everyday life, and we’re excited to bring Waymo's incredible technology to the Uber platform.” Uber will be competing against or possibly with the likes of Tesla (TSLA) and others in this space down the road.
But in the here and now, Wall Street is focused on Uber’s ability to grow its core segments, cut costs, and concentrate on the bottom line.
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Uber sales soared 57% in 2021 and 83% in 2022 as it rebounded from a Covid drop, driven by surging delivery and riding hailing (mobility)—and a “change in the business model for our UK Mobility business and the acquisition of Transplace by Uber Freight” in FY22.
Uber also bought delivery peers Drizly in October 2021 and Postmates in December 2020. On top of that, Uber is rolling out video advertisements on its core Uber app, Uber Eats, and more.
Recent Growth & Outlook
Uber’s mobility and delivery segments both accounted for roughly $15 billion of gross bookings in the first quarter of 2023 vs. freight’s $1.4 billion for a total of $31.41 billion, with mobility up 40% as people returned to a completely post-covid life.
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Looking ahead, Uber’s revenue is projected to jump 18% in 2023 and another 19% in FY24 to $44.51 billion vs. $31.88 billion in FY22. Its mobility unit is projected to surge 31% in 2023, with delivery set to jump 17% and freight set to slide 12%. Zacks data also projects its Monthly Active Platform Consumers will climb 11% to 146 million in fiscal 2023, with trips up 21%.
On top of that Uber is projected to swing from an adjusted loss of -$4.65 a share to +$0.09 in FY23 and then soar to +$0.87 a share in FY24. Uber’s positive earnings revision help it land a Zacks Rank #2 (Buy), and it has crushed our EPS estimates the past two quarters.
Price and Valuation
Uber stock is up around 13% since its 2019 IPO and 100% in the last year, which includes a 90% surge in 2023 and a 50% climb over the past three months. Uber touched new 52-week highs of $48.08 per share on Thursday, and it is trading above its 21-day, 50-day, and 200-day moving averages.
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Yet, Uber still trades around 20% below its own records and 14% under its average Zacks price target at roughly $47 a share right now. Uber also trades at a 60% discount to its own highs at 2.3X forward sales and 43% below the Zacks tech sector. And its PEG ratio, which factors in its bottom-line growth outlook, sits at 2.0 vs. tech’s 2.1.
Bottom Line
Some investors might want to wait until after Uber’s results and guidance to see how things shake out. It is also possible that Uber experiences a pullback following earnings even if it reports solid results, as investors lock in profits as they did with Tesla and others. Uber is also trading near overbought RSI levels.
That said, investors with long-term outlooks might avoid the market timing game and simply buy more down the road if Uber stock slips. And Wall Street is very high on the stock, with 23 of the 29 brokerage recommendations Zacks has at “Strong Buys,” alongside four “Buys,” and two “Holds.”
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