Uber Stock: A Rebound in 2025 Will Make It Worth More Than Palantir

Uber Technologies(UBER -1.81%) has had a challenging year, with shares declining by about 7% on the year. However, the stock swiftly rebounded and soared as high as 37% by October. It wasn't until December that shares of Uber started to crater, with the stock plunging 10.7% over the past three months despite a 6.4% spike post-Q3 earnings on Oct. 31. The culprit behind Uber's sell-off? Concerns surrounding autonomous driving fleets. Specifically, in early December, Alphabet's autonomous vehicle subsidiary, Waymo, announced that it is partnering with a start-up called Moove to help manage its autonomous vehicle fleets. Considering Uber is the main player in the ride-hailing space, investors were surely confused as to why Waymo is partnering with somebody else.



However, there are several reasons why these concerns are overblown. First, Uber is a diversified operation. While ride sharing is its largest source of revenue, the company also operates a delivery platform through assets including Drizly and Postmates -- which focus on alcohol and food delivery. On top of this, Uber has a massive global footprint -- operating in over 70 countries. This extensive footprint allows Uber to tap into various markets and reduce the impact of competition in any single region.



Moreover, robotaxi fleets are likely to be rolled out on a city-by-city basis over a long period of time. For this reason, Uber has enormous potential to strike partnerships with players such as Waymo or Tesla, which may see strategic benefit in working with Uber in specific urban environments. Lastly, Uber's strong financial position allows it to invest in research and development, as well as acquisitions, to stay competitive in the mobility market.



Uber's potential for a rebound in 2025 is further supported by its valuation multiples. As of Jan. 16, Palantir's market capitalization is right around $160 billion, with a P/S ratio of 62 and a P/E ratio of 341. By contrast, Uber only trades at a P/S multiple of 3.4, and its P/E ratio of 33 is hovering around all-time lows. The subtle idea at play here is that nothing has actually changed about Uber's fundamentals. Rather, the current sell-off is driven by a narrative that competition in the autonomous vehicle landscape will eat into Uber's market share in the ride-hailing space. However, despite competition from Waymo and Tesla, this idea has yet to unfold at all, let alone at any notable scale.



In conclusion, Uber stock is poised for a healthy rebound in 2025. The company's diversified operations, global footprint, and strong financial position make it well-positioned to navigate competition in the autonomous vehicle space. Moreover, Uber's undervalued stock price suggests that it has significant room for growth. By the end of the year, Uber will likely be worth more than the S&P 500's top-performing stock in 2024, Palantir Technologies.