Uber Posts Robust Q4 Bookings: Analysts Weigh In On Autonomous Vehicle Threat

Uber Technologies, Inc. (NYSE: UBER) recently reported its fourth-quarter 2024 earnings, with gross bookings growing 18% year-over-year (YoY) and 21% on a constant currency basis. The company's strong performance was driven by robust growth in both mobility and delivery segments, with mobility gross bookings growing 24% YoY ex-FX and delivery bookings growing 18% YoY. Uber's adjusted EBITDA grew 44% YoY, and its adjusted EBITDA margin as a percentage of gross bookings improved to 4.2% from 3.4% in Q4 2023. The company's net cash provided by operating activities was $1.8 billion, and its free cash flow was $1.7 billion.

Analysts have weighed in on Uber's long-term prospects, with some expressing optimism about the company's strategic positioning and growth potential, while others have raised concerns about the threat of autonomous vehicles (AVs) to the ride-hailing market. Here's a breakdown of analysts' views on Uber's long-term prospects and the AV threat:

1. Optimistic views on Uber's long-term prospects:
* JPMorgan analyst Doug Anmuth reiterated an Overweight rating but cut the price target from $95 to $90. He noted that while EBITDA was in line with consensus, underlying fundamentals remained strong, with MAPC growth of 14% YoY and frequency growth of 4%. Anmuth highlighted the company's plans to invest in building the AV use case and expressed optimism about Uber's approach to autonomous vehicles, stating that the company should benefit as the AV market scales.
* BofA Securities analyst Justin Post reaffirmed a Buy rating and raised the price target from $93 to $95. Post noted that bookings and revenues were ahead of Street expectations, while EBITDA came in slightly short due to investments in long-term growth. He highlighted the strong performance of Uber One, Uber Teen rides, and Uber for Business, indicating that the uptick in marketing spend had positive ROI.
* Goldman Sachs analyst Eric Sheridan maintained a Buy rating and lifted the price target from $96 to $97. Sheridan noted that while gross bookings guidance for the first quarter was slightly weaker than expected, it factors in a currency headwind of 550 basis points. He emphasized management's commitment to compounding adjusted EBITDA at a "high 30% to 40%" CAGR through 2026, with healthy FCF conversion and capital return to shareholders.
2. Concerns about the AV threat:
* KeyBanc Capital Markets analyst Justin Patterson reiterated an Overweight rating and price target of $85. He noted that gross bookings grew by 21% YoY to $44.2 billion, but management guided to gross bookings between $42.0 billion and $43.5 billion, which was below Street's estimates. He raised EBITDA estimates for 2025 and 2026 to reflect "a mix shift to mobility and delivery vs. freight bookings."
* Needham analyst Bernie McTernan reaffirmed a Hold rating and price target of $90. McTernan noted that affordability is likely to be "a major push" for Uber in 2025, as the company shifts back towards demand with affordability as the primary objective. He highlighted UberX Share, Price Lock, and Uber One as products that should help improve affordability.
* Cantor Fitzgerald analyst Deepak Mathivanan maintained an Overweight rating and price target of $80. Mathivanan noted that mobility bookings growth was stable at +24% YoY ex-FX, driven by accelerating trends in the U.S. He also highlighted the strong performance of Uber Eats, with accelerating bookings growth of 18% YoY.
* JMP Securities analyst Andrew Boone reiterated a Market Perform rating on the stock. Boone noted that Uber reported a strong quarter, with both mobility and delivery gross bookings up 18% YoY, ahead of consensus. He highlighted the company's efforts to "talk down" the threat of AVs disrupting the ride-sharing market and emphasized the challenges of commercializing this technology.

Uber's approach to autonomous vehicles sets it apart from competitors by focusing on being the indispensable go-to-market partner for AV players, rather than trying to develop and commercialize the technology itself. This strategy allows Uber to leverage its existing platform and infrastructure to integrate AVs into its services, while also benefiting from the advancements made by other companies in the AV space. Some specific initiatives and partnerships that contribute to Uber's perceived advantage in this area include:

1. Waymo Partnership: Uber has partnered with Waymo, one of the leading companies in AV technology, to integrate Waymo's self-driving cars into its ride-hailing platform. This partnership allows Uber to offer AV rides to its customers without having to invest in the development and commercialization of the technology itself.
2. AV Supply on the Platform: Uber is investing in building AV supply on its platform by working with various AV companies to integrate their technology into its services. This approach allows Uber to offer AV rides to its customers while also benefiting from the advancements made by these companies in the AV space.
3. AV Market Scaling: Uber believes that the AV market has the potential to be a $1 trillion opportunity in the US alone. By positioning itself as the go-to-market partner for AV players, Uber can tap into this growing market and benefit from the increased demand for AV services.
4. Commercialization Challenges: Uber acknowledges the challenges associated with commercializing AV technology and highlights the fact that it will take significantly longer for AVs to become widely available. By focusing on being the go-to-market partner for AV players, Uber can still benefit from the AV market's growth without having to overcome the hurdles associated with developing and commercializing the technology itself.

In conclusion, Uber's robust Q4 bookings and strong financial performance have led analysts to weigh in on the company's long-term prospects and the threat of autonomous vehicles. While some analysts express optimism about Uber's strategic positioning and growth potential, others raise concerns about the AV threat. Uber's approach to autonomous vehicles, focusing on being the go-to-market partner for AV players, sets it apart from competitors and positions the company to benefit from the growing AV market without having to develop and commercialize the technology itself.