Uber Technologies (NYSE:UBER) soared to an all-time high on Wednesday following its announcement of a historic $7 billion share buyback program, buoyed by a robust recovery in ride-share revenue and strong demand in its food delivery segment. The ride-hailing giant, which posted its first annual net profit since its 2019 IPO, expressed confidence in maintaining consistent buybacks over time.
Uber’s Chief Financial Officer, Prashanth Mahendra-Rajah, hailed the share repurchase program as a testament to the company’s formidable financial momentum. Investors responded positively to the news, propelling shares up by 12%, even as thousands of drivers across the United States planned a one-day strike demanding fair pay from Uber, Lyft (NASDAQ:LYFT), and DoorDash (NASDAQ:DASH).
The company’s robust performance was underscored by a significant increase in free cash flow, surging to $3.4 billion in 2023 from $390 million the previous year. Despite pandemic-induced challenges, the ride-share market experienced a sharp expansion as mobility increased and employees returned to offices, leading to Uber’s market value more than doubled in the past year.
Thomas Hayes, chairman of hedge fund Great Hill Capital, praised Uber’s strategic move, describing it as a vote of confidence in the demand for its services and the operational prowess demonstrated by CEO Dara Khosrowshahi. Looking ahead, Uber expects mid- to high-teens percentage growth in gross bookings over the next three years, accompanied by a high 30s to 40% increase in adjusted core profit.
Dan Coatsworth, an investment analyst at AJ Bell, highlighted the significance of Uber’s shift towards returning capital to shareholders, signaling a departure from its previous image as a cash-burning startup. While dividends may be considered in the future, the initiation of buybacks reflects Uber’s evolution into a financially disciplined entity with a solid growth trajectory.
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Author Faith Yakubu 
