On February 14, Uber Technologies (UBER) stock experienced a meteoric rise, closing at $79.15 per share, marking a remarkable 14.73% surge from the previous day. This sudden upswing ensued following Uber’s historic announcement of its inaugural buyback program, signifying a laudable reward for its shareholders.
Uber’s board of directors approved a substantial $7 billion for share repurchases, signaling their belief that the company’s stock is currently undervalued. Chief Financial Officer, Prashanth Mahendra-Rajah, revealed that the buyback plan’s primary objective is to offset stock-based compensation.
When a company repurchases its own stock, it essentially eliminates those shares from circulation, leading to a reduction in the total number of outstanding shares. Consequently, this action diminishes the denominator in the calculation of earnings per share, resulting in an augmented bottom line.
Price Performance
Uber’s shares, recently added to the S&P 500 index, have soared by 47.2% in the last three months, vastly outperforming the 10.6% growth of the S&P 500 index.
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The company recently reported strong fourth-quarter 2023 results, propelled by the resurgence of the ride share market from pandemic-induced lows.
Zacks Rank & Other Key Picks
UBER currently has a favorable Zacks Rank of #2 (Buy).
See the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Other Key Picks in the Industry
Investors eyeing the same industry may also consider some other top-performing stocks like Shopify (SHOP) and Zscaler (ZS).
Shopify has outperformed the Zacks Consensus Estimate in each of the past four quarters, with an average beat of 82%. The company’s robust growth drivers comprise of expanding its merchant base, international operations, adding fulfillment network functionalities, and a strong focus on mobile commerce.
Meanwhile, Zscaler has consistently exceeded the Zacks Consensus Estimate over the last four quarters, with an average beat of 27.3%. The company is reaping the benefits of the mounting demand for cybersecurity solutions, fueled by a series of data breaches, as well as the increasing need for privileged access security driven by digital transformation and cloud-migration strategies.
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Uber’s pioneering move to implement a stock buyback program elicits optimism among investors who anticipate favorable returns on their investment. As the company strategically offsets its stock-based compensation, shareholders are likely to witness a bolstered bottom line amidst a surge in Uber’s stock price performance.
Uber’s bullish trajectory is emblematic of a phoenix rising from the ashes, symbolizing a resurgence of faith and confidence in the company’s capabilities. This landmark decision on buybacks reiterates Uber’s commitment to enhancing shareholder value, underpinning its status as an industry leader in the fiercely competitive ride-hailing market.
Furthermore, the company’s exceptional performance mirrors an alluring symphony, resonating with both seasoned and novice investors. This extraordinary upswing in share value mirrors a rare masterpiece, captivating the investor community with its promising outlook.
As Uber’s stock continues to defy gravity with its stellar ascent, seasoned and budding investors alike are flocking to be part of this extraordinary journey. The resounding success of Uber’s stock buyback announcement solidifies the company’s status as an astute player in the realm of business and finance.
