By looking at Uber's (UBER -6.23%) stock chart, you'll quickly notice how volatile the journey has been for investors. In the past five years, the shares have climbed an impressive 251% (as of March 19). But there have been multiple drawdowns that would force even the most mentally strong investors to lose confidence.
This growth stock has clearly been a winner in the past. Can it continue its incredible performance over the next five years?
Bouncing back from 2020
The COVID-19 pandemic dealt a blow to Uber's business, as it did for many companies at the time. In 2020, Uber's trip count, gross bookings, and revenue all declined by double digits versus 2019. This makes sense, given that consumer mobility was restricted due to shelter-in-place orders and the fact that many restaurants and stores were temporarily closed to in-person activity.
However, this period allowed Uber's delivery segment to truly shine, as people ordered out for more of what they needed as they stayed home. In the last three quarters of 2020, gross bookings in this division were well ahead of those for mobility.
It's safe to say that the overall business has bounced back nicely from 2020's disturbance. Last year, Uber reported $163 billion in gross bookings and $44 billion in revenue, both significantly higher than four years before. As of Dec. 31, 2024, the company counted 171 million monthly active platform consumers, up from 93 million at the end of 2020.
And this is now an extremely profitable company, thanks in large part to its scale. Uber went from a $4.9 billion operating loss in 2020 to $2.8 billion in operating income in 2024.
NYSE: UBER
Key Data Points
Navigating uncertainty
Uber is showing no signs of slowing down. In the first quarter of 2025, management expects gross bookings to jump 17% on a year-over-year basis. And for the full year, consensus analyst estimates call for revenue to rise 15%.
The biggest question mark for investors is the potential threat of autonomous driving technology. In theory, this could dramatically reduce costs for riders, pushing people to alternative ride-hailing services that could pop up. But it's anyone's guess when the tech will be fully ready for mainstream adoption, if ever.
Uber is in a favorable position because it has a direct relationship with so many consumers across the globe. The ability to aggregate demand and supply is a key advantage highlighting the uphill battle any possible autonomous vehicle app would have to overcome.
Consequently, the company's brand has tremendous value among stakeholders that will likely be hard to challenge. Uber also possesses a powerful network effect that strengthens its competitive position over time.
Looking ahead, Uber will probably continue to be a partner of choice among those enterprises developing self-driving technology. It's already working with Alphabet's Waymo, as well as Nvidia.
Should you buy Uber stock right now?
Uber shares have crushed it for investors. But they don't look expensive today. The stock trades at a forward P/E ratio of just 15.8. Compared to the Nasdaq 100's 24.5 multiple, Uber looks like a bargain.
All signs point to Uber being a smart investment candidate right now. Billionaire hedge fund manager Bill Ackman agrees. His firm, Pershing Square Capital Management, started buying shares earlier this year. The thesis hinges on confidence that Uber's earnings will grow more than 30% per year "over the next several years." This can certainly instill confidence in the average investor's decision-making process.
Regardless of what you think about Ackman's latest move, Uber looks well-positioned to outperform the market over the next five years. The return might not resemble past returns, but the company's solid fundamentals and compelling valuation are notable characteristics.
