MW Why Uber's cheap stock is worth a fresh look despite the company's spending spree
By William Gavin
Uber's stock has fallen more than 20% off peak levels due to concerns about costly futuristic plans, but Deutsche Bank analysts say the investments are worthwhile
Uber expects robotaxis to become a "multitrillion-dollar opportunity," according to CEO Dara Khosrowshahi.
Uber Technologies is investing heavily in autonomous vehicles and other areas for long-term growth. That's been a sore point for investors worried about profits in the here and now.
"We suspect everyone believed there should have been more Ebitda upside," Benchmark analyst Daniel Kurnos wrote Thursday, referring to earnings before interest, taxes, depreciation and amortization. Instead, results on that profit metric Wednesday were more in line with the consensus view last quarter, and the company's forecast for the first quarter of 2026 narrowly missed Wall Street's expectations.
Deutsche Bank analysts led by Benjamin Black think Uber (UBER) is sacrificing Ebitda upside in order to invest in longer-term growth across its mobility and delivery divisions, as well as cross-platform projects like the Uber One membership program. Those investments are likely to support its business down the road, they added, even if they bring heavier costs in the short turn.
It's a worthy tradeoff, according to the Deutsche Bank analysts, who rate Uber's stock a buy. Black's team said Thursday that Uber is "compelling" for long-term investors. Shares closed near $74 on Wednesday, meaning they were trading at less than 12 times estimated 2027 Ebitda all while the company grows at a 25% compound annual rate through 2027.
The Deutsche Bank analysts added that they wouldn't be surprised if Uber's incoming finance chief leans on the company's strong free cash flow to continue a buyback spree. Uber in 2025 bought back roughly $6.5 billion worth of stock, up from $1.25 billion in 2024, while free cash flow grew 42% to more than $9.7 billion.
Read: Uber's stock is almost historically cheap. Are robotaxis an existential threat?
Uber stock was up 1.5% in afternoon action on Thursday, recovering some losses from a post-earnings selloff a day earlier. Shares have traded lower immediately after earnings for six straight quarters and remain about 24% below their record close of $100.10 achieved in October.
Uber's stock has come under pressure in recent months as its rivals join it in ramping up plans for autonomous vehicles, which are seen as the future of the ride-hail industry.
The company has at least two dozen partners and plans to begin offering autonomous-vehicle services in at least 15 cities this year. By 2029, Uber hopes to be the biggest facilitator of robotaxi rides around the world.
"Having learned from our AV deployments thus far, we are even more convinced that AVs will unlock a multitrillion-dollar opportunity for Uber," Uber CEO Dara Khosrowshahi said in prepared remarks on Wednesday.
Analysts' reactions to Uber's plans have been mixed.
The Deutsche Bank team thinks Uber has some advantages over rivals like Tesla $(TSLA)$ and Alphabet's $(GOOG)$( GOOGL) Waymo, pointing to the company's widespread global presence, litany of partnerships and strong free cash flow, which it can invest toward hardware. Uber's approach should help it "future-proof" the business as AV adoption rises, Black's team said.
But a team of analysts led by Wedbush Securities' Scott Devitt has a different view. They say that Uber's expectation for a fragmented AV industry is unlikely and that only a handful of companies will be successfully deploying AVs.
In the U.S., that's likely to be Tesla and Waymo, which Devitt expects to operate in many of Uber's top 20 markets by the end of the year. That could put about 30% of Uber's mobility bookings at risk of facing the "most direct competitive threat" from robotaxis, he said in a note to clients.
"Importantly, both operators continue to build out infrastructure and data collection, while several of Uber's deals and partnerships will not begin to scale until later this year and into 2027," Devitt added. Wedbush rates Uber's stock at neutral and Devitt lowered the company's price target to $75 from $78 on Thursday.
Uber is expected to carry out 22% of all U.S. robotaxi trips in 2032, falling behind Tesla and Waymo, according to Morgan Stanley's projections. About a fifth of Uber's projected AV trips are expected to come through deals with Waymo.
-William Gavin
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(END) Dow Jones Newswires
February 05, 2026 15:31 ET (20:31 GMT)
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