Should You Invest $1,000 in Uber Right Now?
Key Points
Uber's growing user base, increasing trip count, and higher revenue indicate strengthening network effects.
The stock’s current valuation is very compelling, given the company’s earnings prospects.
- 10 stocks we like better than Uber Technologies ›
Uber Technologies (NYSE: UBER) is the defining business in the gig-economy era. It rode the wave of smartphone penetration and better internet connectivity, as well as a desire for greater flexibility from drivers and riders, to achieve monster success in the past decade. Shares have been on fire, with prices soaring 220% just in the past three years (as of Dec. 22).
Should you invest $1,000 in this growth stock right now?
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Uber's network effect is strengthening
Investors who consider adding Uber to their portfolios are certainly making a smart move. The business possesses a powerful network effect, thanks to its two-sided mobility platform and three-sided delivery ecosystem. More stakeholders boost the value proposition, elevating the company's competitive position.
Uber's monthly active users increased 17% year over year in the third quarter to 189 million (as of Sept. 30), with revenue up 20% and free cash flow totaling $2.2 billion. Uber facilitated 3.5 billion trips in the last three months.
The stock is taking a breather
After hitting a peak price of $100.10 on Oct. 6, Uber shares are cooling down a bit. They currently trade 21% off that all-time high. This gives those with $1,000 (or any amount really) available to invest a good opportunity to buy the stock, especially since it's selling at a compelling price-to-earnings ratio of only 10.2. That multiple has contracted by 23% this year.
Uber's ability to grow its earnings rapidly is noteworthy, and it's precisely what should lift the stock over the next five years.
Should you buy stock in Uber Technologies right now?
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool has a disclosure policy.
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