9. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 145
Ride-hailing company Uber Technologies, Inc. (NYSE:UBER) is one of the widely held stocks by hedge funds. The ride-hailing company is expected to become a completely electric and zero-emission platform by 2040.
In Q2 2024, Uber (NYSE:UBER) grew its gross bookings by 21% year-over-year and reported a 14% increase in audience. Last year the company partnered with Waymo, to bring autonomous driving technology to UBER. While Uber’s (NYSE:UBER) management thinks autonomous vehicle (AV) technology holds promise, they believe the transition would be rather gradual and human drivers will co-exist with autonomous vehicles for a long time. To strengthen its position on autonomous driving, the company recently extended its partnership with Waymo to offer ride-hailing services to Atlanta and Austin by early 2025.
Despite the uncertainty in the autonomous driving industry, Uber is expected to benefit tremendously from the AI wave. Analysts are bullish on the stock, and their 1-year median price target of $90 points to a 20% upside from current levels. According to the Insider Monkey database, at the close of Q2 2024, 145 hedge funds were bullish on Uber Technologies, Inc. (NYSE:UBER), with total stakes amounting to $8.7 billion.
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.”
