Uber CFO Says Stock Undervalued, Initiates $1.5 Billion Accelerated Stock Buyback

On Monday, Uber Technologies, Inc. UBER announced it has entered into an accelerated share repurchase (ASR) agreement with Bank of America to repurchase $1.5 billion worth of stock as part of its previously authorized $7 billion share repurchase program, initially approved in February 2024.

Under the agreement, Uber will receive approximately 18.6 million shares, representing about 80% of the expected total repurchase.

The final number of shares to be retired will be determined based on the volume-weighted average price during the agreement’s term. The transaction is expected to be completed in the first quarter of 2025.

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CFO Prashanth Mahendra-Rajah emphasized that Uber’s stock is undervalued relative to its business performance and described the ASR as a strategic move to enhance shareholder value.

“We are entering 2025 with considerable momentum and expect to continue scaling our free cash flows significantly, enabling us to return meaningful capital to shareholders while still investing in growth,” stated Prashanth Mahendra-Rajah.

“Our stock is undervalued relative to the strength of our business, and we plan to accelerate our buybacks under the existing authorization as a result. This ASR represents a value-enhancing deployment of capital, retiring over one percent of our market cap.”

In October, Uber reported fiscal third-quarter 2024 revenue growth of 20% year-on-year to $11.188 billion, beating the analyst consensus of $10.97 billion. It clocked a GAAP EPS of 46 cents and an adjusted EPS of 46 cents, which beat the analyst consensus of 41 cents.

Its Gross Bookings grew 16% year-over-year to $40.97 billion. Mobility Gross Bookings were $21.00 billion, up 17% year-over-year; Delivery Gross Bookings were $18.66 billion, up 16%; and Freight Gross Bookings were $1.31 billion, up 2% year-over-year.

Trips grew 17% year-over-year to 2.9 billion, or 31 million per day. Uber’s Monthly Active Platform Consumers reached 161 million, up 13% year-over-year.

Price Action: At the last check on Monday, UBER shares were trading higher by 5.43% at $68.10 premarket.

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