We recently published a list of 9 Best Stocks to Buy in 2024 According to Billionaire George Soros. Since Uber Technologies Inc (NYSE:UBER) ranks 9th in the list, it deserves a deeper look.
Billionaire George Soros has been one of the most active and divisive figures in the Wall Street. Often a right-wing target, the billionaire handed over the control of his $25 billion empire to his son Alexander Soros last year. The 93 year-old Hungarian American is known as the philosopher investor in the Wall Street, mainly due to his contributions to philosophy and his deep desire to leave his mark in the world of philosophy, which many believe he fulfilled thanks to his General Theory of Reflexivity for capital markets.
George Soros founded Soros Fund Management in 1970. Since its inception through 2010, the fund posted on average a 20% annual rate of return. A Wall Street Journal report earlier this year said that Soros Fund Management has posted a compound annual return of 13.5% over the past three years through June 30, 2023.
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George Soros in his book The New Paradigm of Financial Markets wrote a chapter titled “Autobiography of a Failed Philosopher” in which he talked in detail about how many, including his son and his biographer, started accepting the idea that Soros was a failed philosopher. Soros talks in detail about his childhood, his relationship with his father who at one point, according to Soros, lost all ambition in life and did not amass any wealth. A Jew by birth, Soros decided to come to the UK after the Nazi occupation of Hungary. Soros’ first interactions with philosophy started when he was impressed by the works of Karl Popper. But Soros’ dreams of creating a career in philosophy could not realize for several reasons, some of which he talks about in his book:
“I would have preferred to stay within the safe walls of academe—I even had a teaching assistant job prospect at the University of Michigan in Kalamazoo, but my grades were not good enough, and I was forced to go out into the real world. After several false starts, I ended up working as an arbitrage trader, first in London and then in New York.* At first I had to forget everything I had learned as a student in order to hold down my job, but eventually my college education came in very useful. In particular, I could apply my theory of reflexivity to establish a disequilibrium scenario or boom-bust pattern for financial markets. The rewarding part came when markets entered what I called far-from-equilibrium territory because that is when the generally accepted equilibrium models broke down.”
For this article we scanned Billionaire Soros’s Soros Fund Management’s Q1 portfolio and chose its top 9 stock picks. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
George Soros of Soros Fund Management
Uber Technologies Inc (NYSE:UBER)
Billionaire George Soros’s Q1’2024 Stake Value: $46,683,579
Billionaire George Soros’s hedge fund cut its stake in Uber Technologies Inc (NYSE:UBER) by 13% in the first quarter, ending the period with a $46.7 million stake in the ride-hailing company. Uber Technologies Inc (NYSE:UBER) reported Q1 results last month. Revenue in the quarter jumped 15.1% year over year to $10.13 billion, beating estimates by $40 million. Mobility revenue rose 30% during the quarter and delivery revenue was 4% higher, while freight revenue fell 4%. Uber bulls believe Uber Technologies Inc’s (NYSE:UBER) diversification across several segments protects it from volatility as growth in mobility sometimes offsets declines in other sectors and vice versa. Uber Technologies Inc (NYSE:UBER) is also expanding its delivery segment with partnerships and new features, with a goal to cut its reliance on the Mobility segment.
Uber Technologies Inc (NYSE:UBER) P/E stands at near 100, which is much higher than the industry median. However, given Uber Technologies Inc’s (NYSE:UBER) earnings are expected to grow 148.80% in 2025 on a YoY basis and revenue growth could come in at around 15%, the stock’s valuation isn’t outlandishly high. Based on its 2025 EPS estimate of $2.09, the stock is trading at 30X its earnings, which is justifiable given the growth estimates.
RiverPark Large Growth Fund 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.”
Overall, Uber Technologies Inc (NYSE:UBER) ranks 9th in our list of the 9 Best Stocks to Buy in 2024 According to Billionaire George Soros. You can click 9 Best Stocks to Buy in 2024 According to Billionaire George Soros to see the rest of the stocks in the list. While we acknowledge the potential of Uber Technologies Inc (NYSE:UBER), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Uber Technologies Inc (NYSE:UBER) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.