Story Stocks^®

With the turning of the calendar to 2025, Uber's (UBER) fortunes have improved materially after the rideshare and food delivery company saw its stock dive by 30% from the 2024 highs set in October through the end of the year. That steep decline drove the impetus for a $1.5 bln accelerated share repurchase program that UBER announced this morning, providing some more fuel for the stock's U-turn higher. With today's gains, UBER is now up by about 10% to start the year.

The bullish comments from CFO Prashanth Mahendra-Rajah are adding to the positive sentiment. Specifically, in this morning's press release, he stated that UBER is entering 2025 with "considerable momentum" and that the stock is "undervalued relative to the strength of our business." On that note, UBER is currently trading with a reasonable 1-year forward P/EBITDA of about 19.7x.

Concerns over robotaxis and how self-driving technology could put a serious dent in the rideshare industry have cut into UBER's and Lyft's (LYFT) market caps, but an encouraging article from the Wall Street Journal today is helping to calm investors' jitters.

• The article highlights the fact that while UBER and LYFT scrapped their plans to develop their own robotaxi fleets during the pandemic to cut back on costs, both companies are forging key partnerships that should position them to be major players in a robotaxi emergence. For instance, UBER inked a deal with Alphabet's (GOOG) Waymo that will bring autonomous rideshare vehicles to Atlanta later this year, while LYFT has signed partnerships with self-driving tech companies Mobileye (MBLY) and Nexar. 
• Given that UBER and LYFT already have the platforms and technologies in place to operate huge rideshare businesses at scale, robotaxi companies like Waymo -- and possibly Tesla (TSLA), which expects to launch its cybertaxi before 2027 -- may find it more cost effective to enter into profit-sharing arrangements with UBER and LYFT, rather than create a new rideshare platform from scratch.
• Indeed, Waymo and TSLA have their hands full already and are sinking billions into their robotaxi ambitions. General Motors (GM) pulled the plug on its Cruise robotaxi program last month due to the substantial capital required to fund that unprofitable business. Furthermore, it could be years before robotaxis are commonplace across the U.S., although there are some early signs that the public is becoming a little more comfortable with driver-less vehicles. In California, Waymo had nearly 500,000 riders in August, up from less than 20,000 a year earlier.

The main takeaway is that concerns about market share losses at the hands of robotaxis may be a bit premature. In fact, UBER and LYFT may ultimately benefit as robotaxi manufacturers lean on their rideshare platforms to attract new riders.