Uber Technologies' (NYSE: UBER) stock went through some wild swings in 2024, but its price still dipped 2% from the first to the last trading days of the year. The bulls were initially impressed by the ride-hailing and delivery services giant's robust growth in a tough macroeconomic environment, but some regulatory concerns drove its stock lower through the last quarter of the year.
So, is Uber's stock a buy, sell, or hold for 2025? Let's review its near-term catalysts and challenges to decide.
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What has happened to Uber over the past few years?
Uber owns one of the world's top ride-hailing and food-delivery platforms. Its year-end monthly active platform customers (MAPCs) grew from 111 million in 2019 to 171 million in 2024 as its annual trips rose from 6.9 billion to 11.3 billion. From 2019 to 2024, its gross bookings grew at a compound annual growth rate (CAGR) of 20%, while its revenue rose at a CAGR of 25%.
|
Metric |
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
|---|---|---|---|---|---|---|
|
Trips growth |
28% |
(27%) |
27% |
19% |
24% |
19% |
|
Gross bookings growth |
28% |
(11%) |
56% |
19% |
19% |
18% |
|
Revenue growth |
37% |
(14%) |
57% |
49% |
17% |
18% |
Data source: Uber Technologies.
Uber suffered a severe slowdown in 2020 as the pandemic's impact on its ride-hailing business offset the growth of its food delivery business. However, it quickly bounced back from that downturn over the following four years.
Uber stayed ahead of its smaller competitors, like Lyft, rolled out new enterprise, healthcare, and teen-oriented services, and expanded its Uber One subscription service -- which grew 60% to 30 million subscribers in 2024. Those efforts, along with its improved pricing power, lifted Uber's take rate (the percentage of each booking it keeps as revenue) during the year.
Uber also turned profitable on a generally accepted accounting principles (GAAP) basis in 2023, while its net income surged more than fivefold in 2024. Its profitability improved after it divested several unprofitable non-core businesses, downsized its freight and recruitment divisions, pruned its workforce, and streamlined its expenses. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 60%.
What's next for Uber?
For the first quarter of 2025, Uber expects its bookings to rise 17%-21% year over year on a constant currency basis as its adjusted EBITDA grows 30%-37%. For the full year, analysts expect its revenue and adjusted EBITDA to grow 14% and 32%, respectively.
It expects the same tailwinds that drove its growth in 2024 to boost its sales and profits in 2025. It also plans to gradually test out more autonomous vehicles, which could replace its human drivers in a few years, reducing its labor costs.
However, Uber faces two probes from the Federal Trade Commission (FTC), which were launched in late 2024: One targets Uber One's subscription practices, and another concerns claims that it underpaid its drivers in New York City. It's unclear whether the probes will continue under the Trump administration, but those potential issues could compress its near-term valuations.
For 2026, analysts expect Uber's revenue and adjusted EBITDA to rise another 14% and 22%, respectively. With an enterprise value of $154 billion, it still looks cheap at 3 times this year's projected sales and 18 times its adjusted EBITDA.
Is it the right time to buy, sell, or hold Uber stock?
Uber is growing at a healthy rate, it has a wide moat, and economies of scale are boosting its profits. It also looks like a bargain in a market filled with frothy stocks.
Therefore, I think it would be smart to buy and hold Uber's stock this year, even though some near-term uncertainties regarding its FTC probes and stubborn inflation might prevent it from commanding a higher valuation. Over the next few years, its stock will likely soar even higher as it scales up its business and rolls out new services.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
