Down nearly 20%, should you buy this growth stock for $100 now? – Business News (Trending Perfect)


The Internet has changed how people can work and make money. Perhaps no other business embodies the rise of the so-called gig economy quite like it Uber (NYSE: Uber) Do. This cutting-edge ride-hailing and delivery company has become a $138 billion behemoth in 15 years.

But it wasn't a smooth ride. Shares are down 20% from their all-time highs (as of May 15), a feat achieved in February of this year.

Is there an opportunity here? Investors should buy this Growth stocks With $100 now?

Uber's latest financial updates

Despite what the decline in stock price might suggest, Uber is still facing strong momentum. During the three-month period ended March 31, revenue rose 15% year over year. The gain was driven by 15% growth in the number of monthly active platform consumers to 149 million, as well as gross bookings, a measure of the total dollar value of rides and orders, which rose 20%.

“Our results this quarter once again demonstrate our ability to deliver consistent, profitable growth at scale,” said Dara Khosrowshahi, CEO of the company. Q1 2024 earnings call.

These stellar financial results came after Uber revealed that revenue and total bookings rose 17% and 19% respectively in 2023. This indicates continued strong demand. This is a very encouraging sign, given that consumers are dealing with rising interest rates and inflationary pressures, factors that it believes will lead to lower spending on travel and food deliveries.

For the current quarter, executives believe total bookings will range between $38.8 billion and $40.3 billion, which translates to 18% year-over-year growth (at the midpoint). These forecasts indicate that things are not expected to slow down.

After generating $172 million in operating income in the first quarter, Uber has now reported four consecutive quarters of positivity with this metric. Investors will want to see this bottom line performance remain positive, while showing the ability to expand over time. However, it gives the bulls another reason for optimism, especially since Uber has been a consistent money loser throughout its history and is now turning a financial corner.

Positive qualities

In addition to strong growth, investors have other reasons to like the stock. These relate more to the big picture as they relate to Uber's long-term prospects.

Firstly, this company has a dominant position in the market. In the United States, Uber has a whopping 76% share of spending on ride-hailing services. When it comes to delivery, Uber controls 23% of the market, good for second place, but lagging far behind the leader DoorDash.

However, Uber recently announced a partnership with… Instacartcombined with the news that the company is acquiring Taiwan-based Foodpanda, clearly shows that management wants to further penetrate the delivery market, both domestically and abroad.

Uber's size has given it what I believe are its two most important competitive advantages. The brand is so well known these days that the company name is used interchangeably as a verb. This indicates the highest mental engagement of the consumer.

Business is also strong Network effects. As more riders, drivers, and restaurants join the platform, Uber's services instantly become more valuable to all stakeholders. This indicates how difficult it is for startups, no matter how well-funded, to create a competitive market from scratch. It would be nearly impossible to attract drivers without passengers, for example, and vice versa.

As Uber continues to expand with more users, total bookings, and revenue, its business model should allow it to achieve rapidly rising profits. According to estimates by Wall Street analysts, diluted EPS is expected to grow at a CAGR of 50% over the next three years, a much faster pace than the top line.

Therefore, investors should not hesitate to buy the stock while it is down 20%.

Should you invest $1,000 in Uber Technologies now?

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Neil Patel And his clients He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends DoorDash and Uber Technologies. The Motley Fool has Disclosure policy.

Down nearly 20%, should you buy this growth stock for $100 now? Originally published by The Motley Fool



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