5. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 145
Ride-hailing company Uber Technologies, Inc. (NYSE:UBER) is one of the best innovative stocks to invest in according to hedge funds. The ride-hailing company is expected to become a completely electric and zero-emission platform by 2040, a major reason for its growing fanbase across the globe.
In Q3 2024, Uber (NYSE:UBER) grew its gross bookings by 16% year-over-year, the fourth quarter of logging in at least 20% growth. Last year the company partnered with Waymo to bring autonomous driving technology to UBER and has extended its partnership to offer ride-hailing services to Atlanta and Austin by early 2025. During the quarter, the company launched all-electric Uber Green, an EV-only ride option across 40 cities across the globe supported by an EV preference feature in various other markets.
For drivers, Uber (NYSE:UBER) introduced an AI assistant that helps answer EV-related questions along with an EV mentorship program. More recently, on October 3, Uber (NYSE:UBER) formed a partnership with ENSO, The Earthshot Prize Finalist, to launch a range of low-emission electric vehicle tires across the United Kingdom and the United States. Additionally, the company developed a Clean Air Fund worth £145 million to help drivers go electric.
Despite the uncertainty in the autonomous driving industry, Uber Technologies, Inc. (NYSE:UBER) is continuing to make strides in EV, contributing to its ranking on our list. Analysts are also bullish on the stock, and their 1-year median price target of $90 points to a 23% upside from current levels.
RiverPark Advisors stated the following 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.”
