April 22, 2024

Uber Announces $7 Billion Share Buyback, Stock Surges 14%

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Uber’s stock experienced a significant boost, closing up more than 14% on Wednesday, following the ride-hailing giant’s announcement of a share buyback program worth up to $7 billion. The move represents Uber’s first-ever share repurchase program and comes on the heels of strong fourth-quarter results.

Uber CFO Prashanth Mahendra-Rajah expressed confidence in the company’s financial momentum, stating in a press release, “Today’s authorization of our first-ever share repurchase program is a vote of confidence in the company’s strong financial momentum.” He emphasized that Uber would approach the buyback thoughtfully, starting with actions to partially offset stock-based compensation and aiming for a consistent reduction in share count.

The buyback initiative follows Uber’s impressive fourth-quarter performance, where the company surpassed Wall Street’s earnings and revenue estimates. CEO Dara Khosrowshahi characterized 2023 as a year of “sustainable, profitable growth for Uber,” attributing the positive outlook to a shift in consumer spending from retail to services.

Uber’s mobility segment revenue saw a 34% increase from the previous year, while the delivery segment’s revenue rose by 6%. The company reported its first annual operating profit, marking a significant milestone in its nearly 15-year history. Operating profit for 2023 reached $1.1 billion, a remarkable turnaround from the $1.8 billion loss the previous year. Net profit for the year stood at $1.9 billion, compared to an extensive $9.1 billion loss in 2022, influenced by revaluations of Uber’s equity investments.

CEO Dara Khosrowshahi, who took the helm after Uber’s initial public offering (IPO) in 2019, has been instrumental in reshaping the company’s public image. Khosrowshahi’s leadership has played a pivotal role in steering Uber away from the challenges and controversies it faced during the tenure of former CEO Travis Kalanick. The CEO’s success is underscored by his extensive experience, having led the online travel business company Expedia for 12 years before joining Uber.

The announcement of the share buyback program signals Uber’s confidence in its financial health and growth trajectory. The move is expected to positively impact shareholders and further solidify Uber’s position in the evolving landscape of the ride-hailing and delivery industry.

David Thompson
Financial Desk

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