Amazon’s recent grocery expansion has sent shockwaves through the delivery market, with shares of rival Uber falling 1% after the announcement. The e-commerce giant plans to offer same-day grocery delivery in over 1,000 cities by year-end, expanding its reach to 2,300 locations.
However, analysts maintain that Uber is well-positioned to withstand the competitive pressure. With a diversified platform spanning ride-sharing, freight, and advertising, Uber’s revenue streams are less susceptible to Amazon’s grocery push. The company’s focus on integration and leveraging its existing user base could help it defend market share.
Uber’s recent Q2 results showed resilience in the face of intensifying competition. CEO Dara Khosrowshahi highlighted the benefits of combining mobility and delivery services, citing a 35% higher retention rate among consumers using both platforms compared to single-service users.
The company has also made significant strides in its autonomous vehicle partnerships, with new deals announced involving Baidu, Lucid, Nuro, and Wayve. Management’s “barbell strategy” – focusing on both premium and affordable services – has shown strong momentum, with gross bookings exceeding $10 billion for premium services and $1.5 billion for Moto two-wheeler services.
Analysts predict that Uber’s revenue will increase from $44 billion in 2024 to $81.6 billion in 2029, while free cash flow is forecast to expand from $6.9 billion to $16 billion during the same period. The stock currently trades at 18.5x forward free cash flow, which could result in a gain of over 60% if it maintains this multiple.
Despite near-term pressure from Amazon’s grocery expansion, Uber’s broader ecosystem and execution track record suggest that investors should not rush to sell. UBER stock has already bounced back about 2% since the announcement earlier this week, indicating investor confidence in the company’s long-term prospects.
Source: https://www.barchart.com/story/news/34186601/amazon-just-gave-uber-stock-bad-news-should-you-sell-uber-here