Uber Technologies (NYSE:UBER), after transitioning from a loss-making entity to a profit-generating firm, has caught the attention of Wedbush analysts who foresee imminent stock buybacks and an expansion of its international operations and membership scheme. The ride-hailing giant's robust Q3 earnings have led to a surge in its shares, marking the highest peak since mid-2021 and qualifying the company for inclusion in the S&P 500 index.
Devitt has suggested that Uber should promptly initiate stock buybacks to counteract dilution due to stock-based remuneration, given the firm's improved free cash flow (FCF) scenario. In Q3, Uber reported an FCF of $905 million and unrestricted liquidity assets totaling $5.2 billion.
Despite a slight dip in premarket trading, Uber's shares climbed by 3.7% post-earnings announcement. The company logged 2.4 billion trips in Q3, but analysts believe there is room for further growth. Potential growth strategies could include aggressive pricing against its competitor Lyft (NASDAQ:LYFT) and the expansion of the Uber One membership plan that combines ride-hailing and delivery services.
Uber One, which is already operational in 18 countries with a user base of 15 million, could serve as another growth driver for the company. As Uber continues its transition into profitability, these strategies are expected to help cement its position within the global ride-hailing market.
InvestingPro Insights
Drawing from InvestingPro data and tips, Uber's financial landscape offers intriguing facets for investors. With a market cap of $102.01B, Uber has seen a significant return over the last week and year, with a year-to-date price total return of 94.66% as of the end of 2023. The company's revenue growth over the last twelve months as of Q2 2023 stands at 37.0%, despite a recent slowdown.
InvestingPro Tips highlight that Uber is a prominent player in the Ground Transportation industry and is expected to see its net income grow this year. However, it's worth noting that the company has been operating with a moderate level of debt and was not profitable over the last twelve months. Yet, analysts predict a profitable year ahead for Uber, which is currently trading near its 52-week high.
While Uber does not pay a dividend to shareholders, its high EBITDA valuation multiple and high Price / Book multiple may be of interest to investors. For more insights and tips, consider exploring the InvestingPro product, which includes over 10 additional tips for Uber and other companies.
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