Uber Technologies stock jumped nearly 5% in trading Thursday — its best single-day gain since early in October. The ride-hail company is looking to shake off a so-so 2024 performance as analysts debate what the growth of autonomous vehicles will mean for Uber's main business.
Shares of the San Francisco-based tech firm ended 2024 roughly 2% lower than it entered the year. That marked a letdown after the stock surged nearly 150% in 2023 and entered last year as an analyst favorite. The stock has been pressured by concerns that its market share in ride-hailing could be challenged by AVs from Alphabet-backed Waymo and Tesla.
Analysts tagged Uber with both bullish and bearish calls in separate client notes Thursday — highlighting the ongoing debate about the stock.
Uber On Goldman Conviction List
Analysts at Goldman Sachs took a more bullish stance, adding Uber to their conviction list. The Goldman note said that Uber can still deliver on the financial targets it gave during an investors day in February 2024, according to The Fly.
Last week, Goldman Sachs analyst Eric Sheridan described Uber as a top pick for the year during a televised interview with CNBC. He acknowledged Uber was slightly "contrarian" based on its recent performance.
"Right now, Uber is weighed down by a handful of debates," Sheridan said. "Autonomous vehicles, we think that is a potential risk factor but one that will play out over a very long duration or period of time. And over the next one to two years, the vast majority of autonomous-vehicle supply has nowhere near the unit economics to go direct-to-consumer in most markets and will end up as supply or choice for you inside the Uber app."
Goldman Sachs rates Uber a buy with a price target of 96, according to The Fly.
JMP Downgrades Uber
Analysts at JMP Securities, however, fear Uber could struggle as the "ride-share industry transitions to AVs." In a client note Thursday, JMP Equity Research Analyst Andrew Boone lowered Uber to a market perform.
"We believe AVs offer consumers a better experience, while Waymo is blitzscaling and has nearly unlimited access to capital given the size and potential of the AV rideshare market," Boone wrote. "While we acknowledge Waymo is still too small to materially impact results, valuation is likely to be capped until Uber better addresses the transition to AVs, while this transition to a hybrid (first-party and third-party) marketplace is increasingly likely in our view and creates significant execution risk."
Waymo reached more than 175,000 weekly rides late last year across San Francisco, Los Angeles and Phoenix, Boone noted. While Waymo vehicles will be available through the Uber app in upcoming expansions to Atlanta and Austin, Boone said he views it as more likely that Waymo will emerge as a competitor to Uber rather than as a supplier.
Boone added that there is likely to be a regulatory framework for AVs in 2025 that would favor Tesla. Bloomberg reported in November that President-elect Donald Trump was considering easing regulations on self-driving cars.
Uber Stock Technical Ratings
Meanwhile, Uber stock's Relative Strength Rating has degraded to 19, compared with 82 out of a best-possible 99 just three months ago, according to IBD Stock Checkup.
The slide late last year for Uber dragged shares back below the stock's long-term 200-day moving average and shorter-term 21-day line. But shares retook the 21-day line with Thursday's gains, offering a potential positive signal.
Overall, Uber stock has an IBD Composite Rating of 65 out of a best-possible 99. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
