Uber Technologies Stock: Bull vs. Bear

Uber Technologies (NYSE: UBER) has left investors with a range of views. On the one hand, it has performed well in recent quarters, delivering growth and profits. It has also attracted billionaire investor Bill Ackman, who bought a considerable stake in the company.

Yet, its future remains uncertain as it faces ongoing competition and the rise of autonomous ride-hailing businesses. This article will explore the arguments of both the bulls and the bears.

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Bullish view

Uber has been undergoing massive turnaround work in the last few years, evolving from an aggressive but hugely loss-making ride-hailing company to a diversified mobility company with sustainable long-term growth. So far, that move has been positive for the company.

Revenue grew from $31.9 billion in 2022 to $44.0 billion in 2024, while operating profit improved from a loss of $1.8 billion to a profit of $2.8 billion in that period. The solid financial performance resulted from ongoing improvement in operational metrics and the company's cost-cutting efforts.

For instance, the tech company enabled 11.3 billion trips in 2024, up from 7.6 billion trips in 2022. Gross bookings also surged from $115.4 billion to $162.8 billion in the last two years. Uber's result demonstrates its ability to execute in difficult situations and emerge stronger over time.

The turnaround also positively positioned the company to sustain its growth ambitions in the future. To this end, Uber is riding a long tailwind of ongoing growth in the mobility industry. As consumers become more accustomed to Uber's services, they are likely to use them more often, either for ride-hailing or food deliveries. This trend is relevant in the U.S. and overseas, favorably positioning Uber for long-term growth globally.

Uber has also partnered with Waymo (and potentially more autonomous driving companies) to benefit from the rise of autonomous ride-hailing. This strategy ensures that the tech company is at the forefront of this emerging industry, bringing its strengths -- such as a vast consumer base, solid branding, and operational know-how -- into these partnerships. For example, in its latest collaboration with Waymo, Uber will offer Waymo's autonomous ride in Austin exclusively on its app.

In short, the bulls like that the tech company has proven its execution capabilities and has also strategically positioned itself to win in the long term.

Bearish view

While the bulls are optimistic about Uber's business and its long-term prospects, the bears are less convinced. One primary concern is whether Uber can survive in the long run when the ride-handling industry moves toward autonomous driving. Major tech company Waymo (backed by Alphabet) is already well ahead in the competition curve.

At the same time, potential newcomers like Tesla have a big ambition to grab a share in this emerging sector. While Uber aims to be neutral by being the marketplace for ride-hailing, there's no guarantee that the future will evolve as it has planned. For instance, Waymo could decide to go on its own in the future, or Tesla could choose to do everything itself rather than partnering with a ride-hailing platform like Uber.

Besides the longer-term threat, bears also have concerns about whether Uber can continuously grow its market share amid the ongoing competition. In the ride-hailing business, Uber faces strong players like Lyft and even Waymo which are all eager to take market share. Similarly, it has to face DoorDash in the food delivery service. As long as competition in these areas remains keen, it will not be easy for Uber to gain market share.

The ongoing competition also raises questions about whether Uber can sustain the growth trajectory of its top and bottom lines. In particular, the tech company only achieved its first profitable year in 2023, so any deterioration in competitive dynamics could drag it back into the red. Besides, a huge part of the heavy lifting was cost-cutting and raising take rates, which are not sustainable in the long run.

In short, the bear is concerned about Uber's ability to sustain its performance over the longer term amid the issues discussed.

What it means for investors?

Uber is a leading player in the mobility sector, and it has the potential to reach greater heights in the future. However, some risks could jeopardize its long-term ambitions, including ongoing competitive pressure and the transition toward fully autonomous ride-hailing. Overall, Uber is a highly uncertain but potentially rewarding stock, suitable only for those with high-risk appetites.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, DoorDash, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.