UBS Maintains Buy Rating on Uber (UBER), Eyes Strong Growth Despite Robotaxi Concerns
UBS remains confident in Uber (NYSE: UBER) long-term prospects, maintaining a Buy rating with a slightly adjusted price target of $106 (down from $107). Despite concerns around the future impact of robotaxis on the ride-hailing giant’s business, UBS sees Uber well-positioned to meet its ambitious 2026 financial targets and achieve strong growth over the coming years.
Uber’s Strong Growth Trajectory: Mobility and Delivery Segments Shine
UBS highlighted Uber’s impressive growth in Q4 2024, with Mobility bookings growing by 24% year-over-year and Delivery bookings increasing by 18%. The company’s guidance for the first half of 2024 indicates continued momentum, with 20%+ growth expected in the Mobility segment and similar growth for Delivery. These growth figures underscore the company’s robust performance and position Uber for continued expansion in these core areas.
Efficiencies and Margin Expansion: Uber’s Key Strengths
One of the key factors driving UBS’s optimism for Uber is its ability to expand margins. The firm expects ongoing efficiencies within the company to drive margin expansion in 2025 across both mobility and delivery segments. As Uber continues to streamline operations and improve profitability, UBS believes the company’s strong fundamentals will support steady growth and improve its financial performance.
Robotaxis: Risk Overstated, According to UBS
While the future of robotaxis poses a potential disruption to Uber’s business, UBS believes that concerns about this technology’s immediate impact are overstated. The bank notes that Uber estimates robotaxis will only address 10%-15% of rideshare marketplace demand within the next five years, a much smaller proportion than the 30% many investors had feared. UBS’s view suggests that the impact of robotaxis on Uber’s business may be manageable, keeping the company on track for long-term growth.
Growing Membership Base and Strong Financial Outlook
Another positive development for Uber is its growing membership base through Uber One, the company’s subscription service. Uber’s membership increased to 30 million in Q4 2024, up from 25 million in Q3, providing a more stable revenue base and reinforcing customer loyalty. UBS also notes that limited changes in US mobility or global delivery competition are expected to support Uber’s mid-term growth.
Despite slightly weaker-than-expected Q1 2025 guidance, with gross bookings forecasted between $42.0 billion and $43.5 billion, UBS remains confident in Uber’s overall trajectory. The company has also committed to a $7 billion buyback program, further signaling confidence in its financial health and long-term outlook.
UBS Optimistic Outlook: Growth and Upside Potential
In UBS’s upside scenario, the bank estimates Uber’s stock could reach $114 per share, driven by an expected 16% annual growth in gross bookings and an Adjusted EBITDA margin of 5.2%. UBS views Uber as a “multi-platform, steady mid-term compounder,” with strong growth prospects that can weather any short-term challenges.
With its growing market share, commitment to efficiency gains, and continued expansion in core business segments, Uber remains a strong player in the global ride-hailing and delivery sectors, making it a compelling investment for the mid-term.
Stay tuned for Uber’s performance updates as the company continues to navigate the evolving landscape of transportation and delivery, poised for future growth and financial success.
