UBER: Autonomous Expansion Will Sustain Platform Engagement And Profit Momentum

Analysts have modestly raised their fair value estimate for Uber Technologies by about $1 per share to roughly $112, citing a strong Q3 print, accelerating delivery growth versus peers, and confidence that robust engagement and profit expansion can continue even as margin gains normalize and long term autonomous vehicle economics become a greater focus.

Analyst Commentary

Analysts remain broadly constructive on Uber following the Q3 update, pointing to solid execution across mobility and delivery, resilient user engagement, and a strengthening narrative around long term autonomous vehicle positioning, even as expectations for near term AV profit contribution are tempered.

Bullish analysts have nudged price targets higher in response to the company modestly outperforming Street expectations on revenue while delivering robust EBITDA, reinforcing the view that Uber can sustain healthy profit growth even as incremental margin expansion slows from prior peaks.

At the same time, some more cautious voices highlight that the shift in focus toward annual profitability targets and the acknowledgment that autonomous vehicles are unlikely to be a profit driver in the next few years may alter how investors value Uber's long duration opportunities, putting greater scrutiny on capital allocation and returns on invested capital.

Bullish Takeaways

• Bullish analysts see the Q3 beat on revenue and solid EBITDA as evidence that Uber can expand profits while continuing to grow platform engagement. This supports higher fair value estimates and price targets.
• Accelerating delivery growth relative to key peers is viewed as validation of Uber's competitive positioning and cross platform advantages. This underpins confidence in sustained top line expansion.
• The steady core operating performance and disciplined approach to profitability reinforce the view that Uber can balance growth and margin, a key driver of re rating potential in the medium term.
• Despite near term uncertainty around AV profitability, bullish analysts see Uber as one of the best placed platforms to ultimately monetize autonomous technology at scale, adding strategic option value to the equity story.

Bearish Takeaways

• Bearish analysts flag that Q3 EBITDA and the Q4 outlook came in slightly light versus some expectations, which raises questions about how much further margins can expand without slowing growth.
• Management's view that autonomous vehicles will not be materially profitable for several years leads some investors to reassess the timing and magnitude of AV related upside that had been embedded in long term valuation frameworks.
• The shift in guidance toward a more annual, high level profitability framework creates less near term visibility on quarterly execution, which increases the risk of sentiment swings around individual prints.
• With investors now more focused on long term returns on invested capital, Uber faces a higher bar to demonstrate that continued investment in AV and adjacent initiatives will translate into durable, value accretive growth.

What's in the News

• Australian food delivery workers could see pay rise about 25 percent to $20.19 an hour under a draft deal between Uber Eats, DoorDash and Australia’s transport union, which would also require accident insurance coverage if approved in July (Reuters).
• Uber plans to roll out driverless rides in the San Francisco Bay Area using Lucid Gravity SUVs equipped with Nuro’s self driving technology, directly challenging Waymo’s robotaxi service as testing progresses ahead of launch next year (Bloomberg).
• Uber is reportedly preparing to invest about $100 million in Pony AI’s Hong Kong share sale and is also interested in autonomous driving company WeRide’s listing, extending its financial bets on key AV partners (Bloomberg).
• New Jersey’s Attorney General has opened an investigation into the frequency of sexual violence on Uber rides and whether the company misrepresented rider safety, issuing a subpoena seeking internal data, policies and response records (New York Times).
• Uber expects non restaurant deliveries to reach a $12.5 billion annual gross bookings run rate by the end of 2025, up 25 percent from its prior $10 billion outlook, underscoring momentum in retail and other delivery verticals (Bloomberg).

Valuation Changes

• The Fair Value Estimate has risen slightly by about $1 per share, from roughly $111.06 to $112.06, reflecting incremental confidence in Uber’s profit trajectory.
• The Discount Rate has increased marginally from about 8.02 percent to 8.04 percent, implying a slightly higher required return on equity risk.
• The Revenue Growth Forecast has edged down modestly from approximately 14.59 percent to 14.56 percent, indicating a very small recalibration of top line expectations.
• The Net Profit Margin Outlook has improved slightly from around 13.95 percent to 13.96 percent, signaling a minor upgrade to long term profitability assumptions.
• The Future P/E Multiple has risen modestly from about 27.47x to 27.74x, suggesting a small increase in the valuation investors are willing to pay for expected earnings.