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Uber Technologies (UBER) stock jumped Monday morning after the ride-hail and food-delivery giant announced an accelerated share repurchase agreement. The company will buy $1.5 billion shares of Uber common stock through an agreement with Bank of America, Uber said in a news release, part of a previously announced $7 billion share repurchase authorization.
"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," Uber Chief Financial Officer Prashanth Mahendra-Rajah said in a news release. "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."
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Uber said Monday it expects initial delivery of 18.6 million shares, or around 80% of the total covered under the deal, with the transaction set to close during the first quarter of the year. Uber's market capitalization was $136 billion entering trading Monday.
On the stock market today, Uber stock is up more than 5% at 68.07 in recent premarket action.
Uber Stock Hit By Robotaxi Concerns
Uber first announced its $7 billion buyback plan during an investor event in February 2024. The company also gave analysts new long-term financial targets during the event, helping boost Uber stock to a record 81.
But Uber stock has struggled to gain traction since then. The stock has been held back by investor concerns that autonomous vehicles from Waymo and Tesla (TSLA) will soon challenge Uber's ride-hail dominance. Shares have slumped 25% off the stock's high near 87 from early October.
Analysts remain bullish overall on Uber stock, citing strong earnings growth. In separate news Monday, analysts with Wedbush added Uber stock to their "best ideas" list.
"While the trajectory of the AV industry is uncertain, we think the near-term impact to Uber will be minimal given continued progress on growth initiatives, healthy performance in the core business, and the limited availability of AVs," the Wedbush note said.
Uber Stock Technical Ratings
Uber is starting 2025 on a positive note, gaining more than 6% total Thursday and Friday to push above the stock's 21-day moving average. Early gains Monday indicate Uber could approach its longer-term 50-day moving average.
Meanwhile, Uber stock's Relative Strength Rating is 25, down from 90 out of a best-possible 99 six months ago, according to IBD Stock Checkup. Still, it is a minor improvement from the low of 18 a week ago.
Overall, Uber stock has an IBD Composite Rating of 69 out of a best-possible 99. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
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