The bull market has benefited certain companies more than others. Uber (NYSE: UBER) shares have tripled since 2023, benefiting. Company enthusiasm is high. Can this booming tech stock keep rising to a trillion-dollar market valuation by 2035? Consider these factors, investors.
On solid ground Uber has good financial results. Gross bookings rose 19% to $138 billion in 2023, driving revenue up 17% to $37 billion. These values are far higher than five years ago (albeit growth rates are lower), indicating a much larger enterprise. The company has more users and travels than ever.
Uber's management is hopeful about its long-term growth despite being in 10,000 cities. Our goal is to attract more customers who utilize more items and spend more on the platform. Uber's profitability also inspires shareholders. The company's bottom line is improving due to cost cuts and operating leverage. Uber earned $1.1 billion in 2023, its first annual operational profit.
The company generated $3.4 billion in free cash flow last year. As it scales, this figure should rise. If earnings grow faster than revenue in the coming decade, share prices may follow.
Best to lower expectations Uber has grown rapidly since its 2009 start. Naturally, the increases will slow as the business matures. The low-hanging fruit for drivers and riders has been taken. Its previous enormous growth is unlikely to last.
Uber must boost its worth by 545% to reach $1 trillion by 2035 from $155 billion. That would mean remarkable annual gains of 18.5%. This conclusion would please investors, but they should be realistic. It takes big assumptions to envisage Uber reaching $1 trillion. It may succeed in a new industry or with autonomous vehicle technology. However, this is unexpected and not guaranteed.
However, I don't think this is a horrible business. Contrary to my opinion. Uber appears to be a good company. It dominates ride-hailing in the U.S. and takes second place in food delivery to DoorDash. It also has strong network effects that should keep it competitive for a while.
Investors should consider the company's valuation and its potential change. Shares currently have a 34 ahead P/E ratio. This is far above the S&P 500 and tech-heavy Nasdaq-100. As this value multiple shrinks, shareholder returns will be hampered. Don't expect Uber's market cap to reach $1 trillion by 2035. However, buying the stock now may be wise.
stay turned for development