Is Uber (UBER) Poised for a Profitable Ride?

Uber Technologies, Inc. (UBER) recently posted impressive fourth-quarter results that surpassed analysts' expectations. The ride-hailing giant registered a net income of $1.4 billion or 66 cents per share, marking a significant increase from the previous year's corresponding figure of $595 million or 29 cents per share.

Compared to the same period last year, the company saw an encouraging 15% rise in revenue for this quarter. Additionally, Uber reported gross bookings amounting to $37.6 billion, demonstrating a 22% growth on a year-over-year basis. With regards to adjusted EBITDA, the firm exceeded its guidance of $1.18 billion to $1.24 billion by recording $1.28 billion.

Promisingly, the platform's monthly active users increased by 15% to reach 150 million during the fourth quarter, up from 131 million over the same timeframe last year. For the first quarter of 2024, Uber projects gross bookings ranging between $37 billion and $38.50 billion, modestly exceeding existing analyst estimates of $37.43 billion.

Furthermore, Uber anticipates adjusted EBITDA of $1.26 billion to $1.34 billion, compared with the $1.26 billion expected by analysts.

Commenting on the robust results, CEO Dara Khosrowshahi credited the consumer shift from retail to services as a driving factor behind the company’s success. He explained that as more people are making use of services such as dining out at restaurants, attending concerts and sports events, and using home-delivery services, Uber stands to benefit significantly from this change in spending habits.

In addition to these positive reports, the company signaled further confidence by announcing a $7 billion share repurchase program, reinforcing shareholder value and prompting an uptick in stock prices. Emphasizing the importance of the buyback initiative, CFO Prashanth Mahendra-Rajah characterized it as evidence of Uber's solid financial momentum.

Given this positive trajectory, it is plausible to consider adding UBER to your investment portfolio for potential consistent growth. A detailed analysis of the company's key performance indices could provide valuable insights.

Uber's Dramatic Financial Turnaround: From Substantial Losses to Promising Profits (March 2021 - December 2023)

The following is an overview of the trend and fluctuations in UBER's trailing-12-month Net Income from March 2021 to December 2023:

• From March 2021 to September 2022, UBER's Net Income witnessed a steady decline with intermittent spikes. The Net Income started at -$3.94 billion in March 2021 and fell to its lowest point of -$10.06 billion in June 2022.
• This downward trend reversed from September 2022, seeing a steady improvement in the Net Income reported by UBER over the next four quarters. In December 2022, it was -$9.14 billion, further improving to -$3.36 billion in March 2023.
• A significant rebound happened after March 2023, with UBER's net losses decreasing considerably up to June 2023, where Net Income stood at -$374 million.
• The turning point came in the third quarter of 2023, with UBER posting a net profit of $1.05 billion in September. By the end of 2023, the Net Income had further improved to $1.89 billion.

The growth rate of UBER's Net Income from the first value (-$3.94 billion in March 2021) to the last value ($1.89 billion in December 2023) calculates to be around 148%. This indicates that, despite initial losses, UBER managed to mitigate its losses over time and eventually turned them into substantial profits.

In summary, the trailing-12-month Revenue of UBER displayed a consistent growth trend from March 2021 to December 2023. The Revenue started from $10.5 billion in March 2021 and progressively increased each quarter, culminating at $37.28 billion by December 2023. Significant emphasis is placed on recent data progression:

• For the fourth quarter of 2021, UBER experienced a jump from $13.90 billion (September) to $17.45 billion (December).
• In the first quarter of 2022, the Revenue had a substantial increase, reaching $21.41 billion in March.
• It continued its upward trajectory for the first three quarters of 2022, peaking at $31.88 billion by December.
• In 2023, there was a slight decrease in growth rate as it moved from $33.85 billion (March) to $35 billion (June), and then slowly surged to $35.95 billion (September).
• Concluding the year, UBER reported a revenue of $37.28 billion in December 2023, indicating an overall positive performance for the company.

From the initial value of $10.5 billion in March 2021 to the last recorded value of $37.28 billion in December 2023, UBER experienced a considerable growth of about 255% over this period.

The ROA (Return on Assets) of UBER displayed pronounced fluctuations over the timeframe from March 2021 to December 2023. Here are the notable trend observations: In the earlier year, from March 2021 to 2022, there was a downturn in UBER's ROA. The value decreased from -12.6% in March 2021 to a significant low of -28.9% in June 2022. Notably, there was a brief improvement in the second quarter of 2021 when the ROA rose to -3.1%, but the gain was short-lived, and a continual decline returned.

• March 2021: -12.6%
• June 2022: -28.9%

After hitting the lowest point in June 2022, the ROA improved, although it remained negative until June 2023. By March 2023, it had increased to -10.6%, and by June 2023, it was just -1.2%.

• March 2023: -10.6%
• June 2023: -1.2%

For the first time in this series, UBER's ROA turned positive in September 2023 at 3.1%. It further improved to 5.3% by December 2023, marking an end to the period on a promising note.

• September 2023: 3.1%
• December 2023: 5.3%

Overall, the ROA growth rate from the first value in March 2021 (-12.6%) to the last in December 2023 (5.3%) shows UBER has made significant recovery from its financial slump in mid-2022.

The Analyst Price Target for UBER has experienced fluctuations over the given period. To put it simply, the price target underwent a downward trend from November 2021 to February 2023, followed by a steady upward rise until January 2024. Here are some key observations:

• In November 2021, the Analyst Price Target was $72.
• The price target saw a steady decrease, reaching its lowest value in December 2022 at $45. This represents a decline of approximately 37.5% from the November 2021 value.
• From March 2023, the price target began to improve, reaching $47 by May 2023.
• The upward trajectory continued, hitting a peak value of $62.15 by December 2023.
• The most recent data from January 2024 reflects an Analyst Price Target of $63, demonstrating a slight increase from the previous month.

In general, there was an overall drop in the Analyst Price Target for UBER during most of 2022, with gradual recovery throughout 2023 into early 2024.

Steady Rise and Impressive Growth in UBER's Stock Price: August 2023-February 2024

The data provided suggests a steady and upward trend in the share price of UBER over the span of six months from August 2023 to February 2024.

• At the start of this period, on August 25, 2023, the share price began at $44.63.
• By September 15, 2023, the share price had risen to $48.19, a notable increase.
• However, there was a slight dip back to $45.31 by the end of September before the price dropped further to $42.38 by October 27, 2023.
• Despite the early dip, the price quickly rebounded, accelerating significantly throughout November and reached $53.54 by November 17, 2023.
• The significant boost in price continued in December with a peak of $62.43 by the end of the month on December 29, 2023.
• After a short drop to $58.35 at the start of January 2024, the prices surged and sustained above $60, reaching an all-time high of $73.99 by February 15, 2024.

Overall, there is a strong upward movement in UBER's stock price from $44.63 in August 2023 to $73.9975 in February 2024, indicating a strong positive growth rate. Particularly, the growth rate appears to accelerate from November 2023 onwards, with only minor drops in value. It's also worth noting the rapid price recovery observed in late October/early November of 2023 following a decline. Here is a chart of UBER's price over the past 180 days.

Evaluating UBER's Sentiment, Quality, and Growth Ratings Over Time

UBER has an overall B rating, translating to a Buy in our POWR Ratings system. It is ranked #27 out of the 77 stocks in the Technology - Services category.

In the POWR Ratings for UBER, the three most noteworthy dimensions are Sentiment, Quality, and Growth.

Sentiment

The Sentiment dimension has consistently been high throughout the period, with ratings ranging between 66 and 99. It peaked at 99 in August 2023 and then showed a decreasing trend, falling to 66 by January 12, 2024.

Quality

UBER's Quality rating has also remained relatively high, starting at 95 in August 2023. This dimension presents a slow but consistent declining trend over the following months, reaching a rating of 91 by January 2024.

Growth

The Growth rating was initially one of the highest, at 86 in August 2023. However, there is a marked downward trend over the subsequent months. By January 12, 2024, this rating had fallen dramatically to 28.

How does Uber Technologies, Inc. (UBER) Stack Up Against its Peers?

Other stocks in the Technology – Services sector that may be worth considering are Leidos Holdings Inc. (LDOS), Serco Group plc (SCGPY) and Box, Inc. (BOX) -- they have better POWR Ratings.

What To Do Next?

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UBER shares were trading at $79.67 per share on Friday afternoon, down $1.72 (-2.11%). Year-to-date, UBER has gained 29.40%, versus a 5.61% rise in the benchmark S&P 500 index during the same period.

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.

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