Uber Is Back in the Fast Lane
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Our Equity Top Pick List
We have updated our Equity Top Pick List to reflect the events of the past quarter. The list includes those stocks, typically US and European ones, that we consider to be proper investment choices from a fundamental point of view. It can provide a starting point for building a sector-diversified equity exposure in portfolios, but can also be used as a watch list. Technical analysis should be used to time / determine the specific investment decision.
Could the momentum return in the semiconductors?
The semiconductor sector has had a challenging quarter, with its performance in recent months lagging behind improvements in underlying fundamentals, even as AI-driven demand remained exceptionally strong. The accelerating adoption of AI by enterprises and the proliferation of AI agents are significantly increasing the demand for computing capacity, which points to a further surge in cloud services and data center investments. Given current supply constraints, record-high backlogs, and higher-than-expected investment needs, we expect further upward revisions to earnings forecasts in the semiconductor industry. Nevertheless, the sector’s valuation appears favorable from a historical perspective, which, in our view, could result in a more attractive risk-return profile in the coming months.
Uber is showing a nice breakout from a technical perspective, which is the basis for our trading idea on the stock. We would like to capitalize on favorable short-term momentum, but we are also positive about the company’s fundamentals. Revenue and profits could rise significantly for the company in the coming years, as both the mobility and delivery sectors are structurally growing markets where Uber is a leading player. In addition, the company could be one of the big winners as autonomous taxis become more widespread.
Positive technical outlook
There was strong buying activity in Uber stock yesterday, which could set the price on a long-term upward trajectory. Accumulation days have appeared regularly in recent months and have become increasingly frequent in the last few weeks. Yesterday’s move also broke a minor downtrend line, opening up room for an upward move. The formation of a higher low also reinforces the likelihood of a reversal.
Based on the nearest previous breakout level, the initial upside potential is around the $89–$90 target price. This offers a favorable risk-reward ratio of approximately 2:1. Accordingly, we are opening a long position today at around $74. Risk management is ensured by a stop-loss order placed below the previous low ($66.9), while we set the target price at $89.
It could be a story of structural growth
We added Uber to our Equity Top Pick List back in January, as the company is the world’s leading mobility platform and an increasingly significant player in the delivery market. It recently attracted attention in connection with the potential acquisition of Delivery Hero. Over the next four years, revenue is expected to grow at ~13% CAGR, while net profit could rise at a much higher rate - nearly 25 percent (CAGR). Moreover, the stock is not overvalued, its 12-month forward P/E ratio is currently below 20.
The first-quarter report was strong: the number of trips increased by 20%, gross orders in the delivery business jumped by 28%, and group-level EBITDA rose by 33%. Yesterday (June 24), newsflow laid the groundwork for the stock price increase: Uber partnered with five new U.S. brands, which will become available on the company’s delivery platform, thereby expanding its offerings. As the range of offerings becomes more extensive, this could attract even more new companies to the app in a self-reinforcing cycle, which could provide further growth momentum in the long term.
The Uber One subscription program has reached 50 million members, and these members now account for half of all gross bookings and orders. This is particularly important for delivery services, as the subscription model increases order frequency, improves customer retention, and can reduce customer acquisition costs in the long run.
Advertising revenue could also become an increasingly important source of income. The company launched this business line around 2022, and by 2025 it could reach an annual level of $1.5 billion, representing approximately 60% growth. The large user base, combined with data-driven and targeted advertising, could offer even greater growth potential.
Another key pillar of the investment story is self-driving mobility services. Uber does not develop self-driving technology or manufacture cars; rather, it provides the platform - that is, a global base of more than 200 million active monthly users - and as a result, it needs to invest much less money in this area. Recently, Uber has formed numerous partnerships with various companies and is launching its self-driving service in an increasing number of markets.
The company’s robotaxis are available in several cities in the U.S., but they are also expanding into Europe. According to the latest reports, the technology is being tested in Zurich and Madrid. In addition, it is already possible to ride in a robotaxi in Dubai and Abu Dhabi. In any case, competition will be fierce, as Waymo and Tesla are serious rivals at present, and it’s not inconceivable that new entrants will emerge. However, we believe that Uber has a significant advantage as the world’s largest mobility platform, allowing it to scale up its service more quickly.
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