Uber (NYSE:UBER) stock’s valuation is clearly somewhat temporarily overextended, but given the company’s dominant position in taxi transportation, higher multiples and sentiment could be sustained as the autonomous transport opportunity matures. With the company now enjoying expanding profitability, the market is starting to value the stock differently than before. Even though top-line growth is showing moderation, Uber’s long-term margin expansion potential from autonomy significantly outweighs this. Even with this strong profit margin expansion, it’s logical to expect a stock price contraction in the very near term given excessive exuberance from the market around tech right now.
Uber has a strong, global two-sided network that operates in over 70 countries. When supported by extensive proprietary data assets powering AI-driven pricing and routing, and a brand that reaches across various products, it’s difficult to view Uber as vulnerable in any real sense right now. Uber has a market cap of nearly $200 billion, while DiDi Global (DIDIY) has a market cap of only nearly $25 billion, and Lyft (NASDAQ:LYFT) (one of Uber’s most famous lightweight contenders) has a market cap of just $6.3 billion. This alone reveals just how entrenched Uber is in the market, which provides its investors with an immense level of shareholder security through moat, reputation, network effects, brand, and resources for executing future operational strategies effectively.
However, there is a latent vulnerability right now, which could become much more severe for Uber in the next few years. Tesla (NASDAQ:TSLA) has famously begun to strategize a grand entrance into the autonomous taxi market. Although it appears somewhat probable that Tesla will partner with Uber and other commercial taxi networks, Tesla could also opt for an independent app that disrupts Uber’s business model significantly. Given the way that Musk has been developing Tesla’s Full Self-Driving technology, the company will enjoy substantial margin benefits compared to competitors like Waymo. This is because Tesla does not use LiDAR, and instead relies on camera-based AI, which is cheaper and more effective, though takes longer to perfect and train. In quantified terms, Tesla’s hardware costs 1/7 that of Waymo’s. Tesla is also already capable of producing thousands of FSD-ready vehicles monthly, while Waymo’s total fleet remains limited at around 2,000 right now.
Barring this threat from Tesla, Uber is well-positioned for continued success in the autonomous taxi era. Waymo has already begun operating on Uber’s platform, offering autonomous rides across Phoenix, San Francisco, Los Angeles, Austin, and Atlanta. If Tesla decides to take a collaborative approach and deploy its robotaxis on the Uber app, I believe both parties will succeed exceptionally, which is the logical macro bull-case outcome investors will be hoping for.
While most of the market is currently highly susceptible to tariffs instigated by the Trump administration and the retaliation from trading partners, Uber offers unique resilience to these pressures. The Uber app is an asset-light platform model that is essentially tariff-proof. Uber Freight does have some marginal indirect tariff exposure, but this is not the core business. In addition, tariff-induced vehicle costs bypass Uber and are the responsibility of the drivers. This unique situation makes Uber a safe-haven asset amid current geopolitical uncertainties.
The company is now exhibiting strong free cash flow of $7.8 billion as of the last trailing 12 months, with an established and robust net margin. When coupled with tariff insulation, this provides the market with ample reason to keep sentiment for the stock elevated even with it trading above fair-value technical indicators.
Uber’s 14-week Relative Strength Index (RSI) value is now at about 60, which is slightly under the 70 threshold that typically indicates it is overbought. In addition, the stock price is trading substantially higher than the 50-week moving average in price. Therefore, we are looking at a stock that is no longer a prime value investment, but an established industry leader with strong market sentiment positioned as a momentum/growth investment for now.
Uber’s Robotaxi Network Leadership Could Defy Valuation Constraints
Uber’s earnings, while improving over a long-term trajectory, are showing some volatility at present, depending on how they are measured. Therefore, for heightened precision in valuing the company, it is much more favorable to assess it using a revenue and price-to-sales model.
In Fiscal 2024, Uber delivered $44 billion in revenue, and consensus has $50.5 billion as likely for Fiscal 2025, with $58 billion forecast for Fiscal 2026. In a year from now (in the middle of Fiscal 2026), it is probably wise and conservativein an optimistic sense regarding the macroeconomyto forecast trailing 12-month revenue of $54.5 billion.
Uber’s total common shares outstanding have been rising significantly over the past 10 years, which is not surprising due to low profitability early on. However, now, the share count has shown stabilization in the last few years as profits have arrived. To be conservative, I am forecasting an equal share count to the last two years, approximately 2.1 billion, in a year’s time.
That puts my revenue per share forecast at about $26 per share. At a trailing 12-month price-to-sales ratio of 4 at the time (slightly down from present due to sentiment normalization), the stock will be worth about $105. The current stock price is $94, so the implied upside is about 12%.
We can also construct a discounted earnings model which I believe accurately shows Uber as fairly valued right now. The current trailing 12-month earnings per share without non-recurring items is $4.77, and consensus estimates suggest that a 12.5% compound annual growth rate in normalized earnings per share is likely over the next 10 years. For the terminal-stage 10 years following the initial 10-year period, I use an annual earnings per share growth rate of 5%, which is conservative but acknowledges the reality of moderating growth. However, above 5% could certainly be achieved if the robotics/autonomy opportunity is successfully executed by management. I have used a typical 10% discount rate, which accounts for the standard opportunity cost of not investing in a diversified index fund.
Uber’s Robotaxi Network Leadership Could Defy Valuation Constraints
Although the company’s moat is undeniably strong and secures an established second-to-none market position, there are vulnerabilities that could significantly change this. For example, low switching costs, including drivers multi-homing (working for multiple apps), presents some cause for caution as an investor. Further investment scrutiny will be required as the autonomous driving opportunity gains traction and the market diversifies and becomes saturated with competition, including Tesla.
There is also increased global scrutiny on gig-worker classification right now, including by AB5 California, UK Supreme Court rulings, and EU gig economy legislation. Reclassifying drivers as employees could cause labor costs to rise by 20-30%, ironically eroding Uber’s margins just as the autonomy opportunity offers margin expansion that will involve low human labor.
Furthermore, even though Uber itself is resilient to tariff pressures, its drivers are not. They have to bear their own costs, including vehicle maintenance, fuel, and tariffs on imported vehicles, increasing the risk of driver churn under intense macro conditions. However, at this time, I am quite confident that the tariff situation will not intensify severely. Trump would become very unpopular if his tariff agenda caused major macroeconomic weakness. A tarnished legacy amid severe market volatility and bad relations with China is probably the best preventative deterrent against Trump-induced macroeconomic risk right now, but it is still worth having an opportunistic cash position at the moment for value investing amid any market dislocations that occur.
Finally, Uber’s partnership-based autonomous vehicle strategy is highly dependent on third-party vehicle developers like Waymo, Wayve, and Aurora. Regulation is the major near-term and medium-term headwind that could prevent Uber from quickly transitioning to higher-margin services that sustain current market sentiment. However, the whole autonomous vehicle market is in this situation, and some patience is required. Volatility caused by this factor alone can readily be capitalized on.
Recently, the most glaring guru investment in Uber is from Bill Ackman (Trades, Portfolio), who purchased 30,301,161 of the company’s shares, representing 1.45% of Uber’s total shares outstanding. This was done in the business quarter ending 2025-03-31. Uber is now 18.5% of Bill Ackman (Trades, Portfolio)’s total assets under management. This is an enormous position, and it shows the legendary investor’s willingness to not overdiversify and his belief in Uber’s long-term return thesis. As Ackman is a self-proclaimed and well-respected value investor, his investment also affirms that Uber can work for value investors who understand growth and sentiment dynamics with nuance.
Uber is undoubtedly one of the most exciting tech investments on the public market right now because it has the likelihood of being the lynchpin in autonomous transportation firmly in its grasp. Even though sentiment currently seems high, my conservatively optimistic discounted earnings model shows that the stock is actually fairly valued. That said, sentiment could change for the stock if the autonomous vehicle market takes longer to mature. Moreover, with no margin of safety in the company’s valuation, any major competitive threats, like from Tesla, will likely lead to severe stock price volatility. At this juncture, Uber is not the most fantastic investment to make from a pure-return basis, but it can work as a long-term holding for investors who fortunately purchased the stock in the past.
