1 Glorious Growth Stock to Buy Before 2025, According to Wall Street

Uber Technologies (UBER 0.08%) operates the world’s largest ride-sharing platform, but it is also home to its food delivery service and commercial logistics network Uber Freight.

Uber’s stock price is currently down 8% from its all-time high set last month, and Donald Trump’s recent election victory could be one of the main reasons why. However, this could become the largest financial opportunity in the company’s history.

I think the recent decline could be a buying opportunity. The overwhelming majority of analysts followed by The Wall Street Journal seem to agree. They have given the stock the highest possible Buy rating, with none recommending Sell. Here’s why investors might want to buy a slice of Uber before the new year.

The mobility sector is facing significant change

During the third quarter of 2024 (ended September 30), Uber had a record 161 million customers using its platform each month. They completed more than 2.8 billion trips during the quarter, generating $40.9 billion in gross bookings.

A gross booking is the total amount a customer spends on the Uber app. For a rideshare, this includes the driver’s income, and for a food delivery order, this includes the cost of the food, although Uber doesn’t keep that money.

Once these costs are removed, Uber is left with a income figure. That amounted to $11.2 billion in the third quarter, an increase of 20% from the year-ago period.

However, the mobility sector is on the verge of a major change due to autonomous technologies. Uber already offers driverless ridesharing and food delivery on its platform to a limited extent, but their availability will only grow.

Uber drivers across all segments collectively earned $18 billion in the third quarter alone. This figure is included in the $40.9 billion in gross bookings, and it is by far the company’s largest cost.

If autonomous vehicles eliminate this cost entirely, Uber will retain a significantly higher share of each trip, so this change has the potential to completely transform the company’s economics.

Autonomous driving, President-elect Trump and Elon Musk

These three elements are closely linked. The Trump administration will likely approach the business sector with a relatively light regulatory touch, and reports are circulating that it will accelerate self-driving technologies. Tesla CEO Elon Musk was one of the Trump campaign’s biggest supporters, and the company plans to build its own ride-sharing network for its autonomous vehicles.

Investors are speculating that a regulatory change will favor Tesla while increasing competition for Uber, and that’s one reason the latter company’s shares were recently down 8%. I happen to disagree: Since Uber operates the world’s largest ride-sharing network, companies developing self-driving cars will need to connect to its platform if they want to access the largest audience. In other words, Uber’s greatest asset is its user base.

In fact, the company already has partnerships with 14 major autonomous vehicle manufacturers. AlphabetWaymo is one of them, and consumers can already hail one of its fully autonomous cars in Phoenix through the Uber app. Austin, Texas and Atlanta will be added to this list in early 2025 as part of an exclusive deal with Uber.

Unlike Tesla — which has no formal approval to offer fully autonomous driving in any state in the country, Waymo already completes more than 100,000 autonomous trips per week. As a result, Uber and its network of partnerships already have a head start.

Wall Street is bullish on Uber

Widespread adoption of autonomous vehicles will take years. Even as the Trump administration cuts red tape, platforms like Uber still need to convince the public that riding in a self-driving car is a safer and more convenient alternative to relying on a human driver. That said, the industry is likely to move toward self-reliance in the long term, based solely on cost savings.

Uber stock is currently cheap after its recent decline, so now could be a great time for investors to consider taking a long-term position. The shares are currently trading at a price/sales ratio (P/S) of 3.6, less than half of their peak P/S of around 10. But that also represents a 15% reduction from its average P/S of 4.3, dating back to IPO of the company in 2019.

UBER PS ratio data by Y charts.

Additionally, Wall Street is extremely bullish. The Wall Street Journal tracks 56 analysts who cover Uber, and 45 of them have given it the highest possible buy rating. Five others are in the overweight (bullish) camp, and the remaining six recommend holding their position.

They have an average price target of $91.16 for the next 12-18 months, representing a 27% upside from the trading level at the time of this writing. However, the target high of $120 implies a potential upside of 67%.

Investors who believe in the potential of autonomous driving might consider adding Uber to their portfolio before the new year. If the Trump administration begins working to deregulate the industry as soon as it takes office in January, Uber’s current P/S discount could evaporate very quickly as investors begin to see a tailwind in the long term.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Alphabet, Tesla and Uber Technologies. The Motley Fool has a disclosure policy.