Due to These Two Factors, Uber's Stock Has Recovered From Its Beaten Down State

Uber Technologies Inc. experienced a 5.7% surge in its stock early Monday, driven by its announcement of an accelerated share buyback program and the stock’s inclusion in Wedbush's "Best Ideas List."

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The ride-sharing giant revealed plans to execute a $1.5 billion share repurchase agreement with Bank of America, as part of the broader $7 billion buyback initiative it previously announced.

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Chief Financial Officer Prashanth Mahendra-Rajah emphasized the company’s strong financial position heading into 2025. “We are entering 2025 with considerable momentum and expect to significantly scale our free cash flows, allowing us to return meaningful capital to shareholders while continuing to invest in growth,” Mahendra-Rajah stated in prepared remarks.

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Despite recent developments, Uber's stock has underperformed the broader market over the past year. It has risen just 12% in the last 12 months, trailing the S&P 500's 26.5% gain over the same period. Additionally, Uber shares have dropped 13% in the past three months, whereas the S&P 500 has advanced 3.3%. Uber’s management views the stock as undervalued, and the share buyback is expected to be completed in the first quarter of 2025.

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Separately, Wedbush analysts expressed confidence in Uber's long-term prospects by adding it to their "Best Ideas List." They noted that the stock offers an appealing risk/reward profile, trading at approximately 12.8 times their 2026 adjusted EBITDA estimate.

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“We see the current dislocation as unwarranted for a company with robust fundamentals, including mid-teen top-line growth and over 30% year-over-year adjusted EBITDA growth expected in each of the next two years,” Wedbush analysts wrote in a client note.

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Uber's stock has faced pressure in recent months due to a narrowing gap between its financial results and market expectations, limiting its short-term upside. Furthermore, uncertainty regarding the potential impact of automated vehicles (AVs) on Uber’s core business has weighed on investor sentiment.

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Wedbush analysts acknowledged these concerns but highlighted encouraging developments in Uber's key partnerships as a positive indicator. They see these partnerships as pivotal in testing Uber’s value proposition for AV providers in 2025.

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Despite the challenges posed by AVs, Wedbush analysts anticipate minimal near-term impact on Uber. They cited ongoing progress in growth initiatives, solid performance in the core business, and the limited availability of automated vehicles as mitigating factors.

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“That said, we are encouraged by the recent expansion of key partnerships, which will be an important test of Uber’s value proposition for AV providers more broadly in 2025,” the analysts stated.

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Uber’s combination of strategic growth initiatives, partnership expansion, and shareholder-focused actions positions it as a compelling choice for investors, despite recent volatility and challenges related to emerging technologies.

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