Uber Stock Faces Dilemma Amid Autonomous Vehicle Fears

NEW YORK, March 12, 2025 — Uber Technologies Inc. is navigating a challenging phase in the stock market as investor fears around autonomous vehicles loom large. The company’s stock has been stagnant since Tesla announced plans to launch automated taxis in 2026. This announcement has raised concerns about Uber’s market viability, contributing to a 31% stock drop that has yet to fully recover.

Despite predictions of doom, several analysts argue that fears surrounding Uber’s potential obsolescence are overstated. Instead of being sidelined by the rise of autonomous vehicles, some view Uber as a potential partner in this technological landscape. The company already collaborates with Waymo, a subsidiary of Alphabet, in cities such as Atlanta and Austin, and may extend these partnerships even further.

Wedbush analyst Scott Devitt emphasized the potential for autonomous vehicles to reshape the ride-sharing market. “You have this possibility that the debate starts to swing in [Uber’s] favor,” he said, noting that the global self-driving taxi market, currently valued around $1 billion, could balloon to over $2 trillion in the next decade.

While competition from companies like Tesla and Waymo threatens to slice into Uber’s market share, there are opportunities embedded in this growth. Increased usage of ride-sharing services from a wider array of providers could enhance overall demand, benefiting Uber in the long run. Devitt added, “The [ride-share] market expands because there’s more and more use cases that lead to more density of vehicles, which is super-bullish for Uber long-term.”

Uber reported $44 billion in revenue for 2024, with approximately half sourced from ride-sharing and one-third from its Uber Eats food delivery service. As the firm develops its operations, it aims to emerge as a “super app” for various needs beyond transportation.

Advertising could play a significant role in this expansion. As Jason Ware, chief investment officer at Albion Financial Group, put it, “The super app value is in advertising.” Currently, Uber’s ad revenue is in the low-single-digit billions annually, but capturing additional market share of the digital advertising space, worth hundreds of billions, could have a considerable impact on revenue.

Financially, Uber is poised for free cash flow growth. Analysts predict if revenue rises by 15% in 2025, free cash flow could expand by 23% to $8.5 billion this year. This positive trend in cash flow opens possibilities for stock buybacks, bolstering earnings further.

BofA Securities projects Uber’s adjusted earnings per share to be $3.06 in 2025, with growth expected to accelerate by 33% to $4.06 in 2026. Currently, Uber stock trades at 20.4 times expected free cash flow, slightly above the S&P 500 average, suggesting it remains an attractive investment opportunity.

Despite an uncertain economic backdrop that could challenge consumer habits, analysts maintain a positive outlook on Uber’s long-term potential. The stock currently carries a Strong Buy consensus rating, with 32 buy ratings and four holds among analysts.

Overall, while bumps in the road are anticipated due to economic fluctuations and autonomous vehicle implementation, many analysts agree that Uber is well-positioned to navigate these challenges effectively, reinforcing its standing in the fast-evolving transportation landscape.