Uber’s strong financial performance is set to continue as management sees lots of potential for growth.
Progress by rivals in the autonomous vehicle market poses a threat, but so far this business has become a top partner in the space.
Shares are trading off their peak, presenting a solid buying opportunity.
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Without a doubt, Uber(NYSE: UBER) is one of the most disruptive and innovative businesses, having spearheaded the ride-hailing trend. However, investors haven’t been pleased. This growth stock has risen by only 57% in the past five years (as of Dec. 30). That’s a disappointing outcome, especially when you consider that the S&P 500 index would’ve doubled your starting capital over the same time period.
Where will Uber be in five years? Investors can learn a lot by understanding both the bull and bear arguments.
Image source: Getty Images.
Many consumer-facing businesses are reporting slower revenue growth due to the tough macroenvironment. Households are being more critical about how they spend their money. And they’re constantly looking to receive better value. Despite this backdrop, Uber continues to thrive. Its financial results are notable.
Revenue and gross bookings were up 20% and 21%, respectively, on a year-over-year basis during the third quarter of 2025 (ended Sept. 30). Uber handled 3.5 billion trips in Q3, increasing 22% from the same period in 2024. There are now 189 million monthly active users.
What’s more, profitability is encouraging. Uber generated $1.1 billion in operating income last quarter, translating to an operating margin of 8%. The business also produces huge amounts of free cash flow.
Early in 2024, Uber’s management team revealed a three-year outlook, highlighted by a “high 30% to 40% earnings before interest, taxes, depreciation, and amortization (EBITDA) compound annual growth rate (CAGR),” according to CFO Prashanth Mahendra-Rajah. It’s not a stretch to believe that this forecast is attainable.
Uber’s core services still have lots of potential. And adjacent delivery spending within the grocery and retail categories presents a significant opportunity and could also drive more activity on the Uber app. Growing Uber One subscriptions is another lever that can bring on more power users.
To its credit, Uber is in a strong position right now. It has a massive user base, top-notch technical infrastructure, and a powerful network effect. It’s difficult to find faults with the business.
However, one cause for concern is the ongoing autonomous vehicle (AV) revolution. The key long-term risk is that the leaders in the market, such as Tesla with its robotaxi service and Alphabet‘s Waymo, continue to expand to new markets across the country and the world. In doing so, the best outcome for society would be that they become safer than human drivers and that they’re able to lower the costs so much that consumers will almost have no choice but to take these AV rides. Adoption would rapidly climb, and Uber would become obsolete as people flock to the Tesla and Waymo apps.
Up to this point, many AV enterprises have chosen to partner with Uber. If businesses are investing large amounts of capital in AV tech, they probably want a way to scale up fast to earn a return on this capital outlay. Here’s where Uber has an advantage. AV companies can immediately plug into a mainstream platform. It will be very interesting to see how things play out in the years ahead.
Taking into account the bull and bear arguments, I lean on the optimistic side of the aisle. Uber’s brand name, technological know-how, ability to leverage data, and network effect are all powerful traits that should help it successfully navigate the evolution of the AV market. And it’s hard to deny just how impressive the company’s financial results have been.
As of this writing, the stock trades 18% off its peak from early October. Investors can buy shares at a forward price-to-earnings (P/E) ratio of 19.5. Don’t overthink this situation. Uber is positioned to be a solid investment over the next five years, possibly outperforming the market.
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.
Where Will Uber Stock Be in 5 Years? was originally published by The Motley Fool
