1 Growth Stock Down 30% to Buy Right Now

Uber’s recent pullback represents a golden buying opportunity.

Uber‘s (UBER -0.26%) stock hit an all-time high of $86.34 on Oct. 11. That marked a 92% gain from its IPO price of $45. But since then, its stock has pulled back about 30% amid concerns about its cautious near-term guidance and a Federal Trade Commission (FTC) probe of its Uber One subscription service. The Federal Reserve’s warning of slower rate cuts in 2025 exacerbated that selling pressure. However, I believe that pullback might represent a golden buying opportunity for long-term investors.

Why is Uber a sound long-term investment?

Uber owns one of the world’s largest ride-hailing and food delivery platforms. Its total number of monthly active platform customers (MAPCs) grew from 91 million at the end of 2018 to 161 million at the end of the third quarter of 2024.

Image source: Uber.

From 2018 to 2023, Uber grew its gross bookings at a compound annual growth rate (CAGR) of 23%, as its total revenue increased at a CAGR of 27%. It achieved that robust expansion even as the pandemic temporarily throttled its growth in 2020. It recovered quickly from that downturn and continued to grow over the following four years.

Metric

2019

2020

2021

2022

2023

9M 2024 (YOY)

Trips growth

28%

(27%)

27%

19%

24%

20%

Gross gookings Growth

28%

(11%)

56%

19%

19%

18%

Revenue growth

37%

(14%)

57%

49%

17%

17%

Data source: Uber Technologies. YOY = Year over year.

Uber’s scale made its brand synonymous with ride-hailing services in the U.S. and other major markets, and it stayed far ahead of its smaller competitors, including Lyft (LYFT 1.46%). It also weathered the regulatory challenges and demands for higher wages by tweaking its services and compensation in certain regions.

A lot of Uber’s recent growth was driven by Uber One, its subscription-based service which locked in over 25 million members at end of the third quarter of 2024; its Uber Teens platform, which lets parents authorize rides and deliveries for their teenage children, and the expansion of its enterprise and healthcare delivery services. As a result, its take rate, the percentage of each booking it retains as revenue, consistently increased as its pricing power improved.

For 2024, Uber expects its gross bookings to grow 17%-18%. Analysts expect its total revenue to rise 17% this year and 16% to $50.6 billion in 2025. With an enterprise value of $131.5 billion, Uber’s stock looks cheap at just 2.6 times next year’s sales. Lyft, which has an enterprise value of $5.0 billion, trades at less than one times next year’s sales — but it might deserve that discount because it faces tougher near-term challenges than Uber.

On the bottom line, Uber turned profitable on the basis of generally accepted accounting principles (GAAP) in 2023. Its profit soared after it divested several of its unprofitable non-core businesses, downsized its freight and recruitment divisions, executed several rounds of layoffs, and streamlined its spending. Lyft isn’t expected to turn profitable on a GAAP basis until 2025.

Analysts expect Uber’s GAAP EPS to grow 117% in 2024 and 22% in 2025. At $61 a share, its stock still looks attractively valued at 26 times next year’s earnings. At $14, Lyft trades at a whopping 117 times its projected EPS for 2025.

But what about its near-term challenges?

Uber’s valuations are being squeezed by two headwinds: expectations for stickier inflation and slower rate cuts, and the FTC probe of Uber One. Uber should still flourish in a messy macro environment, as it did throughout 2022 and 2023, while the FTC probe only targets Uber One’s enrollment and cancellation policies instead of the entire service.

Simply put, Uber is a high-growth company with a wide moat and attractive valuations. Investors who accumulate the stock after its recent pullback could be well rewarded over the next few years as it continues to expand its ecosystem.

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.

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Asian stocks slide, oil climbs on Russia sanctions: Markets wrap

Stocks and bonds slid in Asia following Friday’s stronger-than-expected US jobs data, while oil climbed to a four-month high as a fresh wave of US sanctions on Russia threatened to crimp supplies. US stock market to close on January 9, declared as Jimmy Carter’s national day of mourning.(Michael Nagle/Bloomberg) MSCI’s index of regional equities headed

滬指連跌三個交易日 深證成指近平收 (15:05) – 20250113 – 即時財經新聞

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戶戶送伙聖雅各福群會推「戶戶送暖」計劃 為期10個月 (13:44) – 20250113 – 即時財經新聞

計劃將為期10個月,由即日起,顧客凡於「戶戶超市」選購指定生活百貨,戶戶送將捐贈同款商品予有需要長者。計劃完結後,戶戶送義工團隊會將捐贈品整理成「戶戶送暖」福袋,並送到每位長者手中。 參與計劃方法十分簡單,顧客只需透過戶戶送平台在四間位於中環、屯門,觀塘及尖沙咀的 「戶戶超市」選購生活百貨時,選購在產品圖片右下角附有聖雅各福群會 CharityToday標誌的產品,便可參與。指定產品的產品說明亦附有計劃簡介,助顧客了解活動內容。有興趣選購計劃內所有指定 生活百貨的顧客,更可直接瀏覽戶戶超市「戶戶助人」頁面選購所有指定商品,為有需要的長者送上 暖暖祝福。 戶戶送指,與聖雅各福群會CharityToday合作,致力解決長者糧食不足問題。早前推出的「FUN 享口福」計劃,便鼓勵顧客在使用戶戶送應用程式及網站時,可於結帳前選擇湊整訂單總額作捐款或作額 外捐款,幫助有需要長者。 戶戶送香港區總經理Nick Price表示,堅信能享用富營養膳食是大家的應有權利,故在營運戶戶送業務的同時,亦一直致力解決本地糧食不足的問題。十分榮幸能夠與聖雅各福群會CharityToday推出「戶戶送暖」計劃,讓我們在這一節慶時刻為社區送暖,鼓勵大眾與我們一起為弱 勢社群帶來實實在在的改變。 聖雅各福群會高級服務經理(企業拓展協作)何卓惠表示,聖雅各福群會十分高興能繼續與戶戶送 有不同的合作,是次推出的「戶戶送暖」計劃,繼續為有需要的長者及弱勢群體帶來改變。計劃鼓勵戶戶送顧客在迎接新春佳節的同時,與社區有需要人士及其家庭一同分享傳統節日帶來的喜悅及溫暖。 其他報道 許正宇:正就國債期貨與內地溝通 冀以最佳時機形式推出 人行行長潘功勝:內地地方債房產風險正收斂 宏觀經濟政策轉向更重視消費 【有片:埋身擊】標指已經跌破短期支持位 後市或進一步向下尋底 證監會:歡迎擴大場外結算公司使用在岸人民幣債券作履約抵押品 半日沽空金額增28% 騰訊沽空增23% 摩通要求員工3月起全面重返辦公室工作 引發部分員工反彈 港股見3個月低 恒指半日跌256點 新吉奧跌17% 宜賓無升跌 匯豐:今年中國經濟增長料放緩至4.% 資金外流人民幣續受壓 春來教育獲浦發銀行提供兩筆定期貸款 涉4.3億元人幣 滬深三大指數半日個別走 滬指跌0.45% 創板指一枝獨秀 海關總署:中國將堅定不移地擴大開放 堅決反對貿易保護主義 戴蒙:若關稅使用得宜 有助解決不公平競爭及國安問題 港元拆息全線向下 1個月HIBOR見兩個月低 中國12月美元計價出口增長10.7% 勝預期 人行公布多項與港互聯措施 下月金管局推千億元貿易融資流動性安排 內地去年出口增5% 進口增2.3% 高盛:料中國股票年底升20% 「增持」A股、離岸中資股 高盛:美國加徵關稅 人民幣或貶至7.5 藥明合聯股東擬折讓6.5%減持 股價曾挫近13%

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