3 Reasons to Buy Uber Stock Like There's No Tomorrow

Has the market's recent setback got you a bit rattled? It's understandable if it does. The severity and speed of this year's sell-off have been unusual, and it caught plenty of people off guard. As veteran investors can attest, however, times like these tend to turn out to be fantastic buying opportunities for the long term.

So if you're on the hunt for a new stock pick now, take a look at ride-hailing outfit Uber Technologies (NYSE: UBER). There are three big reasons why you might want to add it to your portfolio sooner than later.

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1. It's still growing

On the off-chance you're reading this and aren't aware, Uber's primary business is connecting people who need a ride with drivers willing to take them where they need to go. From a distance, it might look like a conventional taxi company. It's not, though. Its drivers aren't employees working on a set schedule. They're contractors who work when and where they like, using their own vehicles to ferry passengers. In many ways, the ride-hailing business Uber pioneered has democratized and de-monopolized the taxi industry.

More important for interested investors, the business model works, and increasingly so. Uber's drivers collectively provided nearly 11.3 billion trips last year, turning that into nearly $44 billion worth of revenue and on the order of $7 billion in operating cash flow. Its top line increase of 18% roughly doubled the bottom line (now that the company's operating at a more cost-effective scale), extending trends that have been in place for some time. Meanwhile, analysts are expecting it to maintain the same basic growth pace through at least 2027.

Data source: StockAnalysis.com. Chart by author.

In all likelihood, however, the company could maintain this growth pace for well beyond that point in time. A report from research outfit Coherent Market Insights suggests that the ride-sharing industry will grow at an annualized pace of more than 13% through 2032. That view jibes with a prediction from Straits Research.

2. Ride-hailing is a new cultural norm

This level of expected growth is encouraging enough in and of itself. Cementing its underlying bullishness in place, however, is the fact that ride-hailing rather than vehicle ownership is increasingly becoming a new cultural norm. This wasn't always the case. Through the early 2000s, owning your own car was viewed as a necessary means of ensuring your own personal mobility, particularly for young people who then turned into adults accustomed to owning cars.

Not anymore. Thanks to a combination of soaring costs and waning convenience, car-sharing company Zipcar suggests that one-third of Americans are considering giving up outright ownership of a vehicle by 2030. In this same vein, a recent survey performed by Deloitte indicates that while only 11% of Americans 55 and older would even entertain the idea of not owning their own vehicle, a sizable 44% of respondents in the 18 to 34 demographic would consider doing so.

Of course, the advent of a viable alternative is helping move things in this direction. And it's not just that interest in owning automobiles is decreasing. Young people are decreasingly interested in even driving. The Federal Highway Administration reports that since the mid-1990s, the number of licensed drivers between the ages of 16 and 19 has fallen from more than 60% to less than 40%.

The slightly older cohort of 20- to 24-year-olds is also driving less: Only about 80% of this crowd holding a driver's license now versus closer to 90% 30 years or so ago. As these younger people age, they're going to further normalize this cultural shift.

3. The stock's on sale

Finally, investors looking for a new pick may want to choose Uber simply because the stock's on sale based on a variety of measures and metrics. Between the lack of progress from the stock since early 2024 and the company's continued profit growth, Uber shares are now trading at less than 20 times next year's expected earnings of $3.32 per share.

Then things really start to cook. While comparative sales growth is apt to start slowing slightly from here, bottom-line growth is actually expected to accelerate now that the company has reached meaningful scale: Profits are expected to swell to a hefty $4.46 per share in 2027. The stock's presently valued at only about 15 times that figure, which is a bargain by almost any modern-day measure for a growth stock of this ilk.

The analyst community agrees. Despite the stock's lackluster performance for over a year now, the consensus 12-month price target still stands at $89.77 per share, which is 35% above the present price. And just to leave no doubt, the vast majority of the analyst community rates Uber stock not as just a buy, but a strong buy.

Less risk, more reward than is currently priced in

Is Uber a bulletproof prospect? No. Like any other potential investment, it brings some risks to the table. Economic weakness could crimp demand for ride-hailing and the localized delivery services that the company also offers, for instance. There have also been attempts to push back on Uber's classification of its drivers as contractors rather than employees, which keeps its operating costs lower. Only time will tell how those efforts will shake out.

Let's also not look past the fact that this stock is capable of subpar performance and above-average volatility, even if its business is relatively resilient. On balance, though, there's less risk and more reward here than the market is currently pricing in. If you can remain patient and stomach the wild ride in the meantime, Uber's actually got quite a bit of long-term upside to dish out.

Should you invest $1,000 in Uber Technologies right now?

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James Brumley 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.