Uber's Q3 Review: Analysts See Opportunity Amid Growth Slowdown, Strong Margins, And Expanding Autonomous Vehicle Partnerships

Multiple analysts rerated Uber Technologies, Inc UBER after Thursday’s quarterly print amid an exciting earnings season.

The ride-hailing giant reported fiscal third-quarter 2024 revenue growth of 20% to $11.188 billion, topping the analyst consensus of $10.97 billion.

Revenue from Mobility grew to $6.41 billion, up 26%. Delivery was $3.47 billion, up 18%, and Freight was $1.31 billion, up 2%.

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JMP Securities analyst Andrew Boone maintained Uber with a Market Outperform and raised the price target from $80 to $95.

KeyBanc analyst Justin Patterson reiterated Uber with an Overweight and lowered the price target from $90 to $85.

Benchmark analyst Daniel Kurnos maintained Uber with a Hold.

Truist analyst Youssef Squali reiterated a Buy on Uber and lowered the price target to $95 from $99.

BMO analyst Brian J. Pitz maintained an Outperform on Uber with a price target of $92.

Needham analyst Bernie McTernan reiterated a Buy and a price target of $90.

RBC analyst Brad Erickson maintained an Outperform on Uber with a price target of $82, up from $80.

BofA analyst Justin Post reiterated a Buy and a price target of $93, down from $96.

Wedbush analyst Scott Devitt maintained an Outperform on Uber with a price target of $86.

JMP Securities: Boone evaluated Uber following its mixed third-quarter results, which revealed gross bookings of $41 billion, slightly underperforming consensus by about 1%, while adjusted EBITDA exceeded the high end of guidance by $10 million. Although Uber’s stock surged 22% since its last earnings report, these latest results fell short of market expectations, leading to a 9% decline in the share price.

The analyst noted this dip as an opportunity, considering Uber’s early-stage growth potential in its Mobility and Delivery sectors, especially as nearly half of the U.S. population still lacks reliable on-demand services. The raised target reflects Uber’s strong market positioning, cost discipline, and evolving product mix.

KeyBanc: Patterson’s price target revision reflects caution over slower growth in Mobility gross bookings and trips in the third quarter, suggesting the Mobility segment may be moderating. The analyst attributes this partly to expanding lower-priced services and easing insurance inflation, which will likely stabilize in the coming quarters.

Delivery growth has been stable for four consecutive quarters, with a 17% year-over-year rise in the third quarter, suggesting sustained momentum. Second, Uber has shown margin expansion, with record quarterly margins for both Mobility and Delivery in the third quarter. Patterson expects the company to continue leveraging fixed costs, with advertising and improved unit economics adding further support.

Uber’s autonomous vehicle (AV) strategy also shows promise, with new AV partnerships positioned to capture market opportunities. He noted that an international AV partnership could launch later this year, with the expanded Waymo collaboration expected by early 2025.

Benchmark: Uber faced a challenging session Thursday, as shares slid amid disappointment over its third-quarter gross bookings, particularly within Mobility. Kurnos raised questions about Uber’s growth prospects in ride frequency, especially across North America, which showed signs of slowing. Anticipation around earnings had been high, but Uber’s performance fell short, with pressure amplified by strong competitor results and new market partnerships. As per the analyst, these may affect Uber’s long-term position, especially regarding AV developments.

Not all metrics disappointed, though—he noted that Uber outperformed on revenue and adjusted EBITDA, underscoring improved operational efficiency across its portfolio. Additionally, Uber reported significant membership growth, which could foreshadow a rebound in frequency gains, as per Kurnos. Management pointed to substantial growth opportunities in less urbanized parts of mature markets, aligning with projections of these regions as critical drivers for the company over the next few years.

While Mobility’s deceleration is evident in Uber’s fourth-quarter outlook, the analyst said guidance for the quarter as a whole met or exceeded expectations. Although market share questions persist with AV competition scaling up, Uber’s expanded partnership with Waymo is seen as a positive indicator, according to him. Kurnos remains optimistic about Uber’s medium-term fundamentals, noting the growing profitability in grocery delivery and untapped potential in international markets.

Needham: McTernan rerated after Uber reported mixed third-quarter results, while fourth-quarter adjusted EBITDA guidance fell short of consensus. Uber reported its fifth consecutive quarter of 20% bookings growth, with Mobility leading at 24%.

Despite a slight expected slowdown due to tougher comparisons, the analyst noted the current pace as a strong foundation for earnings growth in 2025. He also flagged Uber’s increased emphasis on share repurchases, projected to reduce share count starting in 2025, which will significantly boost EPS and free cash flow (FCF) per share, estimated to reach $3 and over $4 in 2026, respectively.

Key takeaways include Uber’s focus on maintaining balanced growth through user and frequency increases, with subscriptions and multi-product options contributing more steadily. McTernan anticipated robust capital allocation with buybacks forecasted at nearly $5 billion in 2025, alongside consistent FCF growth.

RBC: Erickson noted the market’s reaction as excessive and suggested it presents a buying opportunity.

Key positive factors include Uber’s focused expansion into international markets and suburbs, with high demand for low-cost rides. The Delivery segment is also performing well, with new verticals contributing significantly to growth. Uber’s loyalty program, Uber One, reached 25 million members, accounting for 35% of total bookings. Additionally, Erickson noted Uber’s AV strategy, including its partnership with Waymo, positions the company to capitalize on the AV market.

Despite some demand pressure from insurance costs, the analyst remains optimistic about Uber’s long-term growth trajectory, expecting a solid performance from both user engagement and suburban market penetration.

BofA: Uber reported overall solid results, with Bookings, revenue, and EBITDA of $41 billion, $11.19 billion, and $1.69 billion, respectively, mostly above Street estimates. The analyst noted that Quarterly GAAP Operating Income reached $1 billion, though Mobility bookings fell short by 2%, impacted by demand sensitivity to insurance-related price increases in some U.S. cities.

Uber One subscribers grew to 25 million, contributing 35% of total bookings, highlighting Uber’s expanding network effect. Fourth-quarter guidance aligns with Street expectations, although the upper end of EBITDA guidance suggests a slight decline in incremental margins. Post noted that while Waymo’s presence in San Francisco may have raised concerns, it represents a small market for Uber, and the Waymo partnership will likely scale in 2025.

With steady margin improvements and 30% projected EBITDA growth over two years, the analyst noted Uber’s EBITDA potentially reaching $11 billion by 2026. The price target reflects a slightly lower growth outlook but remains supported by Uber’s long-term earnings and free cash flow potential.

Wedbush: Uber reported mixed third-quarter results and provided guidance for fourth-quarter that aligned with expectations, Devitt noted.

Devitt flagged that Uber continues to deliver solid growth and margin expansion, but expectations have risen accordingly, and the magnitude of profit beats has normalized in recent quarters.

Shares were down, reflecting slightly slower booking growth and adjusted EBITDA guidance that likely did not clear investor expectations despite being in line with consensus at the midpoint of the guide, as per the analyst.

Still, he noted Uber is well positioned to deliver mid-teens bookings growth over the intermediate term with rising margins and strong free cash flow conversion (~90% of adjusted EBITDA).

On the call, Devitt will focus on management commentary on AVs and recent partnerships, near-term demand trends and macro commentary, and drivers of growth and margin expansion in 2025.

Price Action: UBER stock is up 2.20% at $73.64 at the last check on Friday.

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