Uber Announces First Share Buyback Program, Stock Jumps Premarket
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Uber Announces First Share Buyback Program, Stock Jumps Premarket

After achieving its first profitable year since going public in 2019, Uber is rewarding shareholders with a substantial $7 billion share buyback program.
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After posting its first-ever profitable year in 2023, Uber (NYSE: UBER) is building momentum with a $7 billion share buyback program and fourth-quarter solid earnings growth in 2023.

The company has turned the corner to consistent profitability and free cash flow generation, enabling a focus on enhancing shareholder returns. The significant share repurchase signals Uber’s confidence in its financial position in the future after its early struggles as a public company.

Uber’s stock price reflected this improved outlook, closing Monday at $68.99 but jumping over 8% in pre-market trading Tuesday to $74.53. With a market capitalization exceeding $140 billion and high growth expected over the next three years, Uber aims to reward shareholders as profits materialize.

Uber Announces its First Ever Share Buyback Program

Uber recently announced a $7 billion share buyback program on the heels of reporting its first-ever annual net profit in 2023. After going public in 2019, Uber posted losses each year until finally reaching profitability last year. Specifically, Uber’s free cash flow soared to $3.4 billion in 2023 from just $390 million the previous year. With strong growth expected over the next three years in gross bookings, adjusted core profit, and free cash flow as a percentage of adjusted EBITDA, Uber feels bullish enough to initiate its largest-ever share repurchase.

In the fourth quarter of 2023, Uber built on its profitability momentum. The company generated $9.9 billion in revenue and $1.4 billion in net income as its mobility and delivery segments showed strong growth. Gross bookings also increased significantly to reach $37.6 billion. With revenue and net income exceeding analyst expectations, Uber ended the quarter on a high note. Furthermore, Uber provided optimistic guidance for the first quarter of 2024.

Given Uber’s finally achieving profitability in 2023 and maintaining growth into 2024, it makes sense that management would take advantage of the share price strength to authorize a $7 billion buyback program. Having turned the corner to consistent profits and free cash flow generation, Uber can now focus on enhancing shareholder returns after its early years as a public company were marked by losses.

UBER Up 8% in Premarket Trading

Uber Technologies Inc.’s stock price closed at $68.99, down $0.13 or 0.19% for Monday. In pre-market trading today, the share price rose significantly to $74.53, an increase of 8.03%. Uber has a market capitalization of $141.972 billion and a beta of 1.33, indicating volatility correlated to the broader market. Over the past 12 months, Uber’s PE ratio was 79.30, EPS was $0.87, and the 52-week range was $29.22 to $73.05, highlighting the growth achieved.

The one-year price target is $77.34, suggesting an upside to the current price. Uber’s next quarterly earnings report is expected between April 30, 2024 and May 06, 2024, providing additional data on the company’s financial performance.

Do you think this is the start of a new era for UBER? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities/assets discussed in the article.