/Uber%20Technologies%20Inc%20logo%20outside%20offices-by%20Sundry%20Photography%20via%20iStock.jpg)
Shares of Uber (UBER), a ride-hailing and food and grocery delivery company, have witnessed a significant pullback. The stock has dropped about 22.6% from its 52-week high of $87. This dip comes amid growing concerns about Uber’s competitive stance in the ride-hailing sector, especially in light of advancements in autonomous vehicle technology.
Major players like Tesla (TSLA) and Waymo are inching closer to launching fully autonomous robotaxi networks, which could challenge Uber’s market dominance. The prospect of the robotaxi has sparked uncertainty about Uber’s long-term prospects in the ride-hailing space.
However, despite these concerns, Wall Street is bullish on Uber stock. Their average price target implies that Uber stock could jump about 35% from its current market price.
While analysts are optimistic, will Uber deliver the kind of growth that justifies analysts’ upbeat projections? Let’s take a closer look at Uber stock.
Uber Stock Has Multiple Growth Catalysts
Despite concerns about the rise of autonomous vehicles (AV), Uber has multiple growth catalysts that could push its share price higher. Uber is well-positioned to thrive as a demand aggregator for AV manufacturers. With approximately 161 million monthly active platform consumers (MAPCs) and a double-digit growth trajectory, Uber’s vast customer base positions it as a key player capable of connecting users with various AV providers.
Uber’s sophisticated algorithms provide a significant advantage. Its algorithms optimize routing, matching, and vehicle utilization, maximizing earnings for AV operators. By ensuring efficient vehicle operations and maintaining high occupancy rates, Uber provides a compelling value proposition for AV providers, which will drive them to its platform.
The company is also expanding its AV partnerships. In the third quarter (Q3), Uber expanded its partnership with Waymo with plans to introduce autonomous ride-hailing services in Austin and Atlanta by early 2025. Moreover, with five new AV partnerships in Q3, it has a network of 14 AV collaborators across Mobility, Delivery, and Freight, highlighting its strategic expansion in the autonomous sector. These developments suggest that the launch of robotaxis could significantly expand Uber’s total addressable market.
Beyond autonomous vehicles, Uber continues to enhance its core business operations. The company’s focus on user acquisition, consumer engagement, and reinvestment into high-potential growth areas positions it well to deliver solid growth. Further, favorable trends, such as the increasing shift toward services spending, consumer preference for on-demand convenience, and the company’s geographic expansion into less dense areas, provide additional avenues for growth.
Uber’s delivery segment is another area for growth. Gross bookings in this segment are growing strongly, driven by increased trip activity. Year-over-year growth in delivery MAPCs is accelerating, with strength in the U.S., Canada, and Mexico. Order frequency has also consistently risen, reflecting deepening consumer engagement. The company continues to attract new users to Uber Eats while driving higher engagement among existing customers.
The success of Uber’s subscription service, Uber One, will likely support long-term growth. The company had over 25 million members as of Q3, up 70% year-over-year. Uber One members account for 35% of combined Mobility and Delivery gross bookings. Further, these members spend more than three times the amount non-members do, reflecting the program’s ability to drive significant incremental revenue.
Uber’s advertising business is another promising avenue. The segment’s revenue jumped nearly 80% year-over-year in Q3. Moreover, Uber is enhancing its ad tech suite, including better ad formats and advanced measurement tools, which will support future revenue. This segment’s growth reflects Uber’s ability to monetize its platform at scale while providing value to advertisers.
Analyst Projections and Final Thoughts
Wall Street analysts have rated Uber a “Strong Buy.” Their average price target of $91.19 implies 35.4% upside potential.
Uber appears well-positioned to sustain long-term growth and enhance shareholder value as it strengthens its core business, leverages its growing delivery segment, expands strategic AV partnerships, drives its subscription base, and sees momentum in the advertising segment.
