Key insights
- Citizens reiterates an outperform rating on Uber, citing progress in autonomous vehicle technology driven by AI. This suggests a growing list of viable partners for Uber. Uber's financial health and revenue growth support strategic investments in AVs. Additionally, Uber is expanding its reach through investments in Delivery Hero and potential acquisition of Kakao Mobility, signaling growth and diversification.
Investing.com - Citizens reiterated a Market Outperform rating and $100.00 price target on Uber Inc. (NYSE:UBER), which trades at a P/E ratio of 16.19 with a market capitalization of $155.78 billion. According to InvestingPro analysis, the stock appears undervalued relative to its Fair Value.
The firm said end-to-end models have materially enhanced autonomous vehicle performance, giving AV companies a clear path to L4 autonomy. AI changed the architecture of AV models while reasoning is increasingly solving edge cases, creating a defined technical path for vehicles with LiDAR, radar, and camera sensors.
Citizens noted this does not guarantee all companies will achieve L4 status given financial constraints and execution risk of developing a business model. Solving the long tail remains a challenge as accumulating miles and exposure to long-tail events is a key challenge for AVs today, though simulation is helping to accelerate technical progress.
The firm said the development implies Uber has a growing list of viable partners as it continues to support the ecosystem with both financial and operational support. The Financial Times reported Uber plans to invest approximately $10 billion in AVs with roughly $2.5 billion for equity investments and approximately $7.5 billion for vehicle purchases. The company maintains a "GREAT" financial health score and generated revenue growth of 18% over the last twelve months, positioning it well for such strategic investments.
Citizens analyst Andrew Boone authored the research note.
In other recent news, Uber has agreed to purchase an additional 4.5% stake in Delivery Hero from Prosus for approximately $318 million. This transaction values the shares at 20 euros each, representing a 22% premium to Delivery Hero’s one-month average share price. Additionally, Uber is reviewing the potential acquisition of a controlling stake in Kakao Mobility, as reported by Seoul Economic Daily. The ride-hailing company has expressed its interest to Kakao Mobility’s major shareholders and is currently conducting due diligence.
In another development, Uber and WeRide have launched fully driverless robotaxi operations in Dubai, available through the Uber app. Meanwhile, Uber has expanded its partnership with Lucid Group Inc., committing an additional $200 million investment, bringing its total investment in the electric vehicle maker to $500 million. This expansion is part of a broader deal that includes a major robotaxi partnership.
Furthermore, Bank of America reported that online spending grew by 12% year-over-year in March, with the first quarter showing an 11% increase compared to the previous year. This growth in online spending outpaced brick-and-mortar spending, which remained flat year-over-year.
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