Shares of Uber (UBER) have been on a roll in 2023. Notably, Uber’s share price has witnessed a whopping rally of 75% year to date (YTD).
Interestingly, the stock is still trading about 30% lower than its all-time high levels of about $60 in February, 2021. Moreover, the stock is trading below its IPO price of $45 in 2019, even after this massive rally.
But what led to the rise in Uber stock in 2023? What were the major drivers for the share price growth? Most importantly, is Uber a screaming buy for investors at these price levels or is it too richly valued post the rally?
About Uber
Before diving into the reasons for the rally in the Uber share price in 2023, let’s check out briefly what Uber is all about.
Uber is a tech enabled mobility services solutions provider with its major businesses being cab services, ride hailing, food and package delivery, and freight services. The company has operations worldwide in roughly 70 countries and 10,500 cities.
Uber, with a market cap of about $87 billion, is one of the leading transport and logistics corporations in the world.
Stellar recent results
The rally in the Uber stock in 2023 is built upon the base of the company’s recent stellar results. Uber reported blowout results for the past two quarters with notable growth witnessed across its major verticals.
Revenues witnessed a massive yearly growth of 49% to $8.61 billion in Q4 2022. Moreover, the ride continued in Q1 2023 as Uber’s revenues saw a growth of 29% to $8.82 billion.
Additionally, robust growth in key metrics like gross bookings ($31.41 billion in Q1 2023, up 19% YoY), trips (2,124 million in Q1 2023, up 24% YoY) and monthly active users (130 million in Q1 2023, up 13% YoY) also aided the burgeoning rally in the Uber share price in 2023.
Pertinently, losses narrowed from a whopping $5.92 billion in Q1 2022 to a mere $157 million in Q1 2023, highlighting the company’s effective cost management strategies.
Attractive valuations
Tech stocks, including Uber, got pummelled in 2022 due to a sharp rise in global interest rates. The stock corrected about 40% in the year. However, such a sharp decline made the Uber stock’s valuations attractive for investors.
Presently, the stock is trading at an EV/2024Sales of about 2.2x, lower than the industry average of 2.4x.
Moreover, Wall Street analysts seem optimistic about the prospects of Uber:
Consensus among analysts ratings is a “Strong Buy,” and the mean price target is $52.23, indicating an upside potential of roughly 20% from current levels. Notably, out of 29 analysts tracking the stock, 23 have a “Strong Buy”, 4 have a “Moderate Buy,” and 2 have “Hold” ratings.
Final takeaway
Robust sales growth, recent free cash flows generation, leading market share (Uber had a 53% market share in US ride hailing in 2022, according to Statista, almost 1.8x its nearest competitor Lyft (LYFT), global footprint and attractive valuations make Uber a compelling choice for investors who are looking for an exposure in the technology enabled transportation space.
On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
