HomeMost PopularInvestingUBER's Coveted S&P 500 Inclusion Rewards Corporate Malfeasance

UBER’s Coveted S&P 500 Inclusion Rewards Corporate Malfeasance

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Uber Technologies UBER surprisingly becomes a member of the coveted S&P 500 prior to the commencement of trading on Dec 18, 2023. The news of UBER forcing its way into the much sought-after index surprisingly impacted the stock positively.

With a portfolio of 500 leading companies that capture approximately 80% coverage of the available market capitalization, S&P 500 is considered the best single measure of large cap U.S. equities. The list is periodically modified to do away with stocks that have been acquired by other companies, delisted from the stock exchange, or failed to meet mandatory criteria of the benchmark index. Consequently, other companies that meet inclusion criteria are added to the list to replace the scrapped stocks.

A company needs to fulfill certain criteria to be included in S&P 500. Firstly, its market capitalization should be at least $14.5 billion. As of Dec 1, 2023, the market capitalization of UBER was a whopping $118.02 billion. Additionally, U.S. firms that meet profitability, liquidity, and share-float standards are the ones that can qualify for S&P 500.

Being a major ride-hailing company in the United States, an addition to the S&P 500 index is likely to increase UBERโ€™s share price further, in turn, boosting investorsโ€™ confidence in the stock. In the past six months, shares of UBER have gained 41.8%, compared with its industryโ€™s appreciation of 6.2%.

Zacks Investment Research
Image Source: Zacks Investment Research

Diversification is imperative for big companies, in particular, to reduce risks and UBER has so far excelled in this area. It carries the momentum with numerous strategic acquisitions, geographic and product diversifications, innovations, etc. Even though Uberโ€™s primary business is ride-sharing, it has diversified into food delivery and freight over time.

Zacks Rank and Stocks to Consider

Uber currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the same industry are Lyft LYFT and DoorDash DASH, each presently carrying a Zacks Rank of 2 (Buy). You can see the complete list of todayโ€™s Zacks #1 Rank (Strong Buy) stocks here.

Lyft is being aided by growth in the ride share market. Anticipating progress in rides to continue, management expects fourth-quarter revenues to rise mid-single digits quarter over quarter. The Zacks Consensus Estimate for LYFTโ€™s current-year earnings has improved 52.8% over the past 60 days.

DoorDash offers a logistics and technology platform to local businesses. The companyโ€™s platform connects merchants, consumers, and dashers. Its efforts to expand are commendable. The Zacks Consensus Estimate for DASHโ€™s current-year earnings has improved 31% over the past 60 days.

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Lyft, Inc. (LYFT) : Free Stock Analysis Report

Uber Technologies, Inc. (UBER) : Free Stock Analysis Report

DoorDash, Inc. (DASH) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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