Uber Technologies Inc Positioned for Strong Growth

Investing.com — Uber Technologies Inc (NYSE: UBER) is set for significant growth across its core businesses, fueled by rising margins, expansion in delivery operations, and robotaxi partnerships, according to TD Cowen. Shares have increased by over 3% in premarket trading.

Mobility Business Growth

Uber’s core Mobility segment is expected to grow in the low- to mid-teens year-over-year, driven by geographic expansion, particularly into less dense markets with limited rideshare availability. Notably, about half of the U.S. market remains underpenetrated.

Delivery Operations Expansion

The delivery segment is also expanding, aided by the grocery vertical and other areas, reaching a $7 billion run-rate earlier this year. Increased frequency, larger basket sizes, and the growing membership in the Uber One program contribute to this growth. Uber aims to onboard more merchants and expand its Delivery operations beyond the current 35 markets, which is significantly less than the 70+ markets covered by Mobility.

Self-Driving Vehicle Partnerships

Uber intends to strengthen its global partnerships in self-driving technology, given its capability to support emerging providers. The company operates 14 partnerships globally, including one with Waymo that started in Phoenix and is scheduled to expand to Atlanta and Austin in the first half of 2025. Furthermore, Uber has recently initiated a collaboration with WeRide in Abu Dhabi.

Financial Outlook

Uber’s EBITDA is projected to grow at a 40% rate from 2023 to 2026, with nearly 90% transitioning into free cash flow. TD Cowen anticipates Uber will generate $5.9 billion in cash flow in 2024, increasing to $10.1 billion by 2026. This robust cash flow is expected to support accelerated share buybacks, initiated in 2025.

Additionally, Uber holds $7.9 billion in equity stakes, offering further capital flexibility.