Uber Technologies (UBER) stock is on a tear without brakes in sight. Following the company’s Q1 earnings, which dropped yesterday, the numbers were hot in the top and bottom lines. Robust growth in ridesharing and delivery, plus game-changing autonomous vehicle partnerships, keep Uber’s engine purring.
Meanwhile, free cash flow is rising, turning Uber into a cash-generating beast. In fact, I’m forecasting that a $100 per share price target is closer than many investors may think, as declining share-based compensation and growing capital returns form a compelling investment case.
Uber’s Q1: Growth That Won’t Quit
Yesterday’s Q1 earnings report showed Uber still has its foot on the accelerator pedal. Gross bookings grew 14% year-over-year to $42.8 billion, or 18% on a constant currency basis, fueled by an 18% jump in trips to 3 billion and a 14% rise in monthly active platform consumers to 170 million.
CEO Dara Khosrowshahi credited stronger user retention and “rapid innovation” in both the Mobility and Delivery segments. Partnerships with key autonomous vehicle players like Alphabet’s (GOOGL) Waymo, Volkswagen (VWAGY), and Aurora also spark excitement. Khosrowshahi called AV tech “the single greatest opportunity ahead,” noting that Waymo’s Austin fleet outperformed 99% of human drivers in trip volume.
We now see that Uber’s growth isn’t only about more rides or food orders at scale. The Uber One membership program ballooned to 30 million members, up 60% year-over-year, powering stickier customer engagement. Management’s doubling down on new offerings like airport shuttles and rider verification to boost safety, which keeps drivers happy and supply steady. Uber’s ever-improving services are actively shaping the future of mobility, boosting user satisfaction, and naturally leading to greater adoption. A virtuous circle of sorts.
Profitability Metrics Steal the Show
Uber’s bottom-line metrics were even more praiseworthy, with adjusted EBITDA soaring 35% to $1.9 billion, and margins reaching a record 11.2%. That’s a massive leap from last year’s 6.5%. However, free cash flow was the absolute stunner at $2.3 billion. To illustrate, Uber actually matched operating cash flow and set an all-time high, showing that it can essentially achieve a 100% FCF conversion rate. Uber’s business model is so incredibly scalable that seeing such a significant margin expansion makes sense as the revenue base moves up.
But here’s the actual gem for long-term investors: while many didn’t notice, I found it quite interesting that stock-based compensation (SBC) as a percentage of revenue dropped to 4.4% over the past year. This is an incredible development from the scary 30%+ levels we were used to in 2019. This has been a nagging worry for shareholders, as high SBC dilutes ownership. Uber’s discipline here signals a maturing business that listens to investor gripes and prioritizes shareholder value.
Discounted Stock Leaves Room for Upside
Despite this week’s stellar earnings report, Uber’s stock has actually dipped post-earnings. If I had to attribute this decline, it would likely be due to Uber’s revenue of $11.53 billion, which missed Wall Street’s $11.62 billion mark. Nevertheless, this is not a revenue growth story (albeit revenue growth was strong), but a free cash flow growth story.
Wall Street expects free cash flow of $8.2 billion this year, which essentially prices Uber at 21.9x FCF, a cheap multiple given that FCF is expected to rise to $10.2 and $12.1 billion in 2026 and 2027, respectively. Uber is starting to print cash, which will only intensify as it gradually hits higher scalability.
Further, Uber’s $7 billion share repurchase plan, announced last year, adds fuel to the fire. By more than offsetting SBC and reducing share count, buybacks could juice earnings per share and signal confidence from management.
Mahendra-Rajah called it a “vote of confidence” in Uber’s momentum, and I agree, as it’s a magnet for investor interest. For this reason, with Uber’s snowballing free cash flow potentially set to power heftier buybacks in the long run, I believe the stock could soon reach the $100 mark. It would still trade at a rather reasonable valuation at this level.
Is Uber Technologies a Buy or Sell Right Now?
Despite Wall Street’s not-so-positive post-earnings reaction, analysts are still very bullish on UBER stock. Over the past three months, UBER has gathered 25 Buy and three Hold ratings, forming a Strong Buy consensus on Wall Street. Notably, not a single analyst rates UBER as a Sell. Today, UBER stock carries an average price target of $93.84, implying a ~14% upside potential from current price levels.
From Cash Burn to Cash Machine: Uber Eyes $100 Milestone
Watching Uber turn from a money-losing speculative cult-like investment into a cash-gushing behemoth has been incredible. Growth endures, margins are on the rise, stock-based compensation is shrinking, and yet, shares remain relatively cheap. The recent acceleration in buybacks should boost investor confidence in the short term.
More importantly, though, the long-term case remains equally attractive. With robotaxis revving and global growth humming, I’m betting $100 is the natural psychological price target that’s next for UBER bulls.