8. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 136
Uber Technologies, Inc. (NYSE:UBER) is an American mobility Software-as-a-Service company that connects riders with drivers. It also provides food delivery services, grocery shopping, and public transport integration in more than 70 countries around the world.
Investors have been concerned about the future of Uber Technologies, Inc. (NYSE:UBER) due to the rise of autonomous vehicles and robot taxis. However, recently an analyst at Goldman Sachs ranked the company as one of his top picks for 2025. Eric Sheridan mentioned that these concerns are short-term headwinds for UBER and he sees long-term potential in the stock. He mentioned that the risk-to-reward situation for the company is more balanced compared to its competitors.
Uber Technologies, Inc. (NYSE:UBER) during its fiscal third quarter of 2024 reported impressive results. The company reached an all-time high GAAP operating profit of $1 billion and grew its gross bookings by 20% year-over-year. Moreover, management in January announced its partnership with NVIDIA to enhance its development of autonomous mobility through advanced artificial intelligence technology. Under the agreement, the company will use NVIDIA’s Cosmos platform and DGX Cloud to accelerate the creation of AI-driven models for self-driving vehicles.
Here’s what RiverPark Large Growth Fund stated regarding Uber Technologies, Inc. (NYSE:UBER) in its first quarter 2024 investor letter:
“Uber Technologies, Inc. (NYSE:UBER): UBER was a top contributor in the quarter following better than expected 4Q23 earnings and 1Q24 guidance. Gross bookings of $37.6 billion were up 22% year over year. Mobility gross bookings of $19.3 billion grew 29% over last year driven by a combination of product innovation and driver availability. Delivery gross bookings of $17 billion were up 19% from last year and continued to be strong throughout the quarter. 4Q Adjusted EBITDA of $1.3 billion, up $618 million year over year, was better than management’s guidance of $1.2 billion, and the company generated $768 million of free cash flow, up from a cash loss of $303 million last year. Management guided to continuing growth in 1Q Gross Bookings (20% growth) and Adjusted EBITDA (of $1.3 billion). The company hosted a well-received analyst day in February during which it guided to three year compounded annual growth rates for gross bookings of mid-to-high single digits and EBITDA of 30-40%, both above investor expectations. The company also guided to free cash flow conversion of 90% of EBITDA.
UBER remains the undisputed global leader in ride sharing, with a greater than 50% share in every major region in which it operates. The company is also a leader in food delivery, where it is number one or two in the more than 25 countries in which it operates. Moreover, after a history of losses, the company is now profitable, delivering expanding margins and substantial free cash flow. We view UBER as more than a ride sharing and food delivery service; we also see it as a global mobility platform with 142 million users (by comparison, Amazon Prime has 200 million members) and the ability to penetrate new markets of on-demand services, such as package and grocery delivery, travel, and hourly worker staffing. Given its $5.4 billion of unrestricted cash and $4.8 billion of investments, the company today has an enterprise value of $165 billion, indicating that UBER trades at 21x our estimates of next year’s free cash flow.”
