Can Uber Stock Cruise to New All-Time Highs After Q3 Earnings?

Uber Technologies (UBER) has had an impressive year, with its stock up about 86% over the past 52 weeks. This surge in value has been fueled by a series of solid financial results, driven by growth in its mobility platform, a stronger delivery business, higher ad revenues, and improving unit economics.

In fact, Uber stock recently reached an all-time high of $87 following Tesla’s (TSLA)robotaxi event. Many investors feared that Tesla’s advancements in autonomous vehicles (AVs) might challenge Uber, but the event was far lighter on details than expected. This reassured Uber shareholders, especially since Tesla didn’t provide significant evidence of progress on their AV technology. Instead, Uber is emerging as a key player in the AV space, collaborating with various AV developers to support sustainable growth.

While AVs provide solid long-term growth opportunities, Uber will deliver its third-quarter 2024 financial results on Thursday, Oct. 31. A solid quarterly report could push Uber stock higher, and allow it to set new record highs after the Q3 earnings release. Let’s dig deeper to understand what’s on the horizon for Uber stock.

What to Expect from Uber’s Q3 Earnings

Uber, which offers ride-hailing, food and grocery delivery, and advertising services, is positioned to deliver solid earnings in Q3, with analysts projecting a notable earnings jump. Analysts expect Uber to post earnings of $0.41 per share, up from $0.10 in the prior-year quarter.

A key factor behind this growth is Uber’s consistent rise in trips and Monthly Active Platform Consumers (MAPCs). Uber has reported six consecutive quarters of over 20% year-over-year trip growth, and record profitability in its last quarter. This trend is expected to continue in Q3, as the company benefits from strong gross bookings in its Mobility segment, driven by expansion into new markets and an increase in trip frequency.

Additionally, Uber’s new travel-focused products - such as Uber XXL (designed to accommodate extra luggage) - are yielding strong results, adding further growth potential.

Overall, Uber’s expansion beyond its core services is proving fruitful. Its “Uber for Business” saw accelerated gross bookings growth in Q2, supporting over 200,000 organizations globally. This growth is expected to continue in Q3, particularly with the launch of features like delegate profiles, which simplify travel management.

In addition to corporate growth, Uber’s low-cost Moto offering remains popular, with trips increasing strongly. Notably, more than 40% of Moto riders have upgraded to other Mobility products, showcasing the effectiveness of Uber's cross-selling strategy.

Lastly, Uber’s ongoing focus on enhancing the Uber Driver app is spurring growth in active drivers, outpacing the increase in gross bookings and positioning Uber to capture even more market share. With its continuous innovation and expansion, Uber’s Mobility division is well-positioned for another strong quarter, keeping it on track to deliver sustained growth.

Delivery Segment: A Strong Performer

Uber’s delivery business is another bright spot, with strong unit volume growth and increased margins. This segment, which includes Uber Eats, has benefited from growing order sizes and healthy demand across various income groups in the U.S.

What’s especially noteworthy is that Uber has improved its delivery margins while continuing to invest in growth initiatives. The company’s platform is growing rapidly, with over 1 million active merchants, and there’s still plenty of room for growth. An increase in the merchant base will lead to improved conversion rates, especially in areas outside major city centers. The increase in merchants also helps reduce transaction costs by shortening travel distances.

In addition to broadening its merchant base, Uber has made delivery more affordable for consumers. This move makes its platform more appealing to users, especially in a weaker economic climate where consumers are more price-sensitive.

Uber is also focusing on improving the economics of each delivery. Through better algorithms, more efficient batching of deliveries, and growing advertising revenue, the company has reduced the cost per transaction. Additionally, by encouraging users to engage with multiple services on the platform, Uber can deliver fixed-cost leverage, increasing profitability over time.

One of Uber’s key partnerships, with Instacart (CART), is showing promising results. This collaboration is particularly beneficial in less densely populated areas where Instacart has a loyal customer base. Uber has reported that the average order size from Instacart is 20% larger than orders made directly through Uber Eats, helping to boost overall revenue.

With its diverse revenue streams, strategic partnerships, and focus on efficiency, Uber’s delivery business remains a strong contributor to its overall growth.

Growing Advertising Revenues

Uber’s advertising segment is also gaining traction. The increasing adoption of sponsored listings on Uber Eats, particularly by large enterprise advertisers, has been a key driver of growth. Uber is enhancing its advertising tools, investing in custom measurement solutions, and expanding its sales team, leading to many enterprise brands committing to long-term advertising campaigns on the platform.

This strategic focus is paying off, with advertisers increasing their spending and staying on the platform for longer periods. As Uber continues to expand its platform initiatives, the advertising segment is expected to remain a significant growth driver.

The Bottom Line on UBER Stock

With its diverse revenue streams, growing efficiency, and strong partnerships, Uber is well-positioned to deliver solid Q3 earnings. Uber stock could rise past its current highs if the company exceeds expectations. 

Wall Street remains bullish, with a “Strong Buy” consensus and an average price target of $89.09 - suggesting expectations for Uber’s upward momentum to continue to new records.

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On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.