SAN FRANCISCO - Uber Technologies, Inc. (NYSE: NYSE:UBER), with a market capitalization of $136 billion, today disclosed an agreement with Bank of America, N.A. to repurchase $1.5 billion of its common stock through an accelerated share repurchase (ASR) program, as a segment of its larger $7.0 billion share repurchase authorization.
Uber's Chief Financial Officer Prashanth Mahendra-Rajah expressed optimism for the company's prospects, citing significant momentum going into 2025 and the expectation of scaling free cash flows, which reached $5.96 billion in the last twelve months. He also stated that the company's stock is currently undervalued in comparison to the strength of its business, a view supported by InvestingPro analysis showing the stock trading below its Fair Value. The ASR is considered a strategic move to enhance value by retiring over one percent of Uber's market cap. [Want deeper insights? InvestingPro offers 12 additional investment tips for Uber, along with comprehensive financial analysis.]
The ASR agreement stipulates that Uber will pay the designated amount to Bank of America on Monday and is set to initially receive approximately 18.6 million shares of its common stock. This figure represents about 80% of the total shares Uber anticipates repurchasing under the agreement. The final number of shares repurchased will depend on the volume-weighted average price of Uber's stock, less a discount, during the term of the ASR, with adjustments as specified in the agreement's terms.
The completion of the share repurchase transactions under the ASR agreement is projected to occur within the first quarter of 2025, ahead of the company's next earnings report scheduled for February 5th. According to InvestingPro data, Uber maintains strong financial health with a "GREAT" overall score, supported by robust revenue growth of 16.7% and a P/E ratio of 30.87.
Uber's announcement includes forward-looking statements that involve certain risks and uncertainties. These statements are not guarantees of future performance and are subject to a variety of factors that could cause actual outcomes to differ from the company's predictions. These include the specifics and timing of the ASR program and expectations for free cash flow and future share repurchases.
The information in this news article is based on a press release statement from Uber Technologies, Inc. It is intended to provide factual reporting without any endorsement of the company's claims or business strategies.
In other recent news, Uber Technologies Inc . has seen significant developments, with analysts maintaining positive outlooks despite industry challenges. BTIG has reiterated a Buy rating on Uber, expecting a mid-teens growth in bookings. The firm's $90.00 price target indicates confidence in Uber's long-term performance despite near-term challenges. Wolfe Research has maintained an Outperform rating on Uber and raised its price target to $92, citing Uber's strong financial health and potential for future expansion.
Similarly, Mizuho (NYSE:MFG) Securities has reiterated an Outperform rating for Uber, highlighting the company's commitment to growth investments and solid fundamentals. The firm also projects that Uber's EBITDA will align with company targets, leading to an increase in Free Cash Flow per share. However, JMP Securities has downgraded Uber's stock from Market Outperform to Market Perform, citing the industry's shift towards autonomous vehicles.
In a separate development, Taiwan's Fair Trade Commission has halted Uber's planned $950 million acquisition of Foodpanda's local delivery business due to anti-competition concerns. Despite this, Uber remains committed to its growth investments, with analysts highlighting the company's strong financial health, solid revenue growth, and potential for future expansion.
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