Uber Technologies (UBER) Stock: Why Robo-Taxi Fears May Be Your Buying Opportunity

TLDR

Table of Contents

Uber stock has been stagnant since October due to autonomous driving concerns from Tesla and Waymo
Uber should be viewed as a partner rather than victim of the autonomous vehicle revolution
The company is diversifying into a “super app” with ride-sharing, food delivery, and potential travel booking
Uber generated strong free cash flow with projections of $8.5 billion in 2025, up 23%
Wall Street analysts maintain positive outlook with average price target of $90.31

Uber Technologies has faced a challenging period in the stock market, with shares stagnating since October 2024 when Tesla announced its plans to begin production of robo-taxis in 2026. This news, combined with existing concerns about Waymo’s autonomous vehicle business, sparked fears that Uber might eventually be pushed out of the ride-sharing market.

The stock initially tumbled 31% following Tesla’s announcement. While it has since bounced back somewhat, a combination of disappointing guidance and concerns about President Trump’s tariffs has kept the stock from making significant progress.

However, many analysts believe these autonomous driving concerns are overblown. Rather than seeing Uber as a victim of the autonomous revolution, they suggest viewing the company as a potential partner in this technological shift.

Uber already works with Waymo, a unit of Alphabet, in cities like Atlanta and Austin. This partnership could expand to additional locations as autonomous technology develops further.

The company has significant advantages that shouldn’t be overlooked. Uber’s app is installed on more than 171 million phones worldwide, giving it massive reach.

Its businesses are also well diversified beyond just providing ride-sharing services. In 2024, about half of Uber’s $44 billion in revenue came from rides, while approximately one-third came from its Uber Eats food delivery service.

The global self-driving taxi market, currently valued at around $1 billion, could grow to more than $2 trillion over the next decade according to Evercore. While this presents competition, it also offers opportunities.

If autonomous vehicles make ride-sharing more accessible and widespread, Uber could benefit from an expanding market. Even if partnerships with companies like Waymo result in lower profit margins per ride, an increase in total ride volume could boost overall earnings.

“The [ride-share] market expands because there’s more and more use cases,” explains Wedbush analyst Scott Devitt. “That leads to more density of vehicles. That is super-bullish for Uber long-term.”

Impressive growth in the fourth quarter

Uber’s growth has been impressive, with 20% revenue growth in the fourth quarter of 2024. Management has guided for 19% first-quarter gross bookings growth at the midpoint, with the slight decrease attributed entirely to a stronger U.S. dollar.

The company aims to become more than just a ride-sharing and food-delivery platform. It envisions transforming into a “super app” – a one-stop shop for rides, food, and booking travel.

Advertising represents another growth opportunity. While ad revenue currently has an annualized run rate in the low-single-digit billions, the digital advertising market is worth hundreds of billions annually. Even capturing a small portion would significantly impact Uber’s revenue.

“The super app value is in advertising,” notes Jason Ware, chief investment officer at Albion Financial Group, which owns the stock.

From a financial perspective, Uber is generating substantial free cash flow. If revenue grows by 15% in 2025 and operating expenses don’t exceed the 13% growth that analysts predict, free cash flow could grow 23% to $8.5 billion this year.

The company’s valuation appears attractive at 20.4 times expected 2025 free cash flow per share. This represents a mere 4.5 points above the S&P 500’s 15.9 times multiple, after trading at a 12-point premium over the past three years.

Investors have been increasing their positions in Uber

Institutional investors have been increasing their positions in Uber. Rakuten Securities Inc. raised its holdings in Uber Technologies by 1,438.2% in the fourth quarter, according to its recent SEC filing.

The stock currently trades at $70.52, well below its 52-week high of $87.00. This represents potential upside according to analysts, who maintain an average price target of $90.31.

Wall Street remains largely positive on the stock. Among analysts, ten rate it a hold, twenty-six give it a buy rating, and one assigns a strong buy rating.

While the road ahead may include some bumps – including potential economic slowdowns that could impact consumer spending on ride-sharing and food delivery – many analysts believe Uber is positioned for long-term success.

Analyst gave stock a Buy rating and a $95 price target

BofA Securities analyst Justin Post has a Buy rating and a $95 price target on the stock, suggesting 34% upside from current levels. Meanwhile, Morgan Stanley analyst Brian Nowak describes potential dips as “near-term opportunities and (for longer-duration investors) attractive entry points for a multiyear winner.”

Uber reported impressive Q4 earnings, with $3.21 per share far exceeding analysts’ estimates of $0.50. The company maintains healthy financials with a debt-to-equity ratio of 0.37 and strong profitability metrics.

In February, insider Jill Hazelbaker sold 31,000 shares at an average price of $81.02, totaling approximately $2.5 million. Following the sale, she still owns 86,973 shares valued at over $7 million.

For investors concerned about autonomous driving disruption, the current price may represent an attractive entry point for a company that appears well-positioned to navigate the changing transportation landscape.

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