Uber Technologies (NYSE:UBER) has been on a remarkable stock market run in recent months, with shares nearing their all-time high. On Tuesday, Uber’s stock closed at $83.2, just shy of its record peak of $87, which it reached on Friday. Investors are now asking: is it still a good time to buy Uber stock despite these high levels? Let’s explore why UBER stock performance indicates strong potential for continued growth.

Factors Driving UBER Stock Performance to New Heights

Uber’s stock surged by 10.8% on October 11, following Tesla’s (NASDAQ:TSLA) much-anticipated robotaxi event, which fell short of expectations. Tesla’s reveal, which focused on autonomous vehicle technology, lacked crucial details on its ridesharing plans, leading to relief among Uber investors that competition from Tesla was not as imminent as feared. This boost helped Uber stock break past previous highs.

Adding to investor optimism is Uber’s revamped strategy in the autonomous vehicle (AV) space. After pausing its AV program in 2018 due to a pedestrian fatality, Uber has since partnered with key players like Alphabet’s Waymo (NASDAQ:GOOGL) and General Motors’ Cruise (NYSE:GM). Most recently, Uber entered a strategic partnership with Avride, an AV startup in Texas, signaling its continued push into the AV market while mitigating risks posed by competitors.

Uber’s Strong Financial and Operational Performance

Uber’s recent stock performance is also backed by strong fundamentals. The company’s shares have outperformed both the broader transportation industry and the S&P 500, which Uber joined in December 2023. This bullish trend is further supported by Uber’s ability to consistently trade above its 50-day and 200-day moving averages, suggesting solid market confidence in the stock.

Uber’s second quarter of 2024 demonstrated impressive results, with operating cash flow reaching $1.8 billion, up 53% year-over-year. Free cash flow also grew by 51%, coming in at $1.7 billion. These strong cash flows allowed Uber to initiate a robust share buyback program, with up to $7 billion authorized for repurchases, a clear indicator of the company’s financial strength.

Diversified Business Segments Fuel Growth

Uber’s success is not limited to its core ride-hailing service. The company has successfully diversified into food delivery (Uber Eats) and freight services. These expansions provide a buffer against the volatility of any single market, with Uber Eats continuing to grow in popularity globally.

In the last reported quarter, Uber saw a 19% year-over-year increase in total gross bookings, which reached $40 billion. The company completed 2.8 billion trips, a 21% increase from the previous year. These strong metrics demonstrate how demand for Uber’s services remains high across its business segments. For the third quarter of 2024, Uber is projecting gross bookings of $40.25 billion to $41.75 billion, a year-over-year growth rate of 18-23%.

Strong Earnings Estimates for 2024 and 2025

The positive outlook for Uber is also reflected in earnings estimates. Analysts expect Uber to continue outperforming expectations, with upward revisions for 2024 and 2025. Uber has exceeded the Consensus Estimate in two of the past four quarters, with an average earnings surprise of 29%.

For 2024, the consensus estimates forecast a 16.5% year-over-year increase in revenue and a 24.1% rise in earnings per share (EPS). This growth trajectory, combined with cost-containment efforts and disciplined spending, paints a bright future for Uber’s profitability.

Why UBER Stock is Still Worth Buying

Despite Uber trading near its all-time high, analysts believe the stock still offers considerable upside. The consensus price target for UBER is $88.48, indicating a potential gain of more than 4% from current levels. Given Uber’s strategic expansion efforts, strong financial performance, and favorable earnings estimates, now could be an opportune time to invest.

Investors also appreciate Uber’s geographic and product diversification, which helps reduce risk and drive growth. The company’s international market expansions and strategic acquisitions further solidify its market leadership. Moreover, Uber’s focus on cost discipline and efficient operations bodes well for sustained profitability.

Conclusion

Uber Technologies has shown impressive stock performance, underpinned by strong financial results, strategic partnerships, and diversification into new markets. While the stock is trading near all-time highs, its growth potential remains significant. With favorable earnings estimates, continued demand across its business segments, and the ability to adapt in a competitive landscape, UBER stock still offers value to investors looking for long-term gains.

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