Wedbush analysts have reiterated a ‘Neutral’ rating on Uber Technologies Inc (NYSE:UBER, XETRA:UT8) following mixed fourth quarter results and guidance, while highlighting longer-term competitive risks from autonomous vehicles.
Shares of the ride-hailing app traded down 5.4% at about $74 following its Q4 report.
Uber reported Q4 gross bookings of $54.1 billion, up 22.5% year over year and above consensus by roughly 200 basis points, exceeding the top end of its guidance range. Adjusted EBITDA was $2.5 billion, or a 17.3% margin, in line with Street expectations, while non-GAAP EPS of $0.71 missed the $0.75 consensus.
For the first quarter, Uber guided gross bookings growth of 21.4% to 24.9% year over year, ahead of the Street’s roughly 19.8% estimate, but forecast adjusted EBITDA of $2.37 billion to $2.47 billion and non-GAAP EPS of $0.65 to $0.72, both below consensus at the midpoint.
Following the report, Wedbush maintained its $75 price target, citing near-term execution but longer-term structural concerns.
“We believe investors are underestimating the rate of change for autonomous vehicle adoption and overestimating Uber’s position when it happens,” the analysts wrote.
They added that while Uber’s management has delivered on growth initiatives, “the lack of clear catalysts in the near-term and shifting perception of AV risk will curb further multiple expansion.”
The analysts also challenged Uber’s view that the autonomous vehicle industry will remain fragmented, arguing that scale and data advantages will favor a limited number of players.
“Physical AI requires massive scale and data collection so that only a few will be able to successfully deploy the proper technology required to offer safe rides to consumers,” the analysts wrote, pointing to Waymo and Tesla as likely leaders in the US market.
Wedbush noted that around 30% of Uber’s US mobility bookings and 25% of profits are generated in the company’s top 20 cities, which it said are most exposed to autonomous vehicle displacement.
“Waymo will likely be in many of Uber’s top 20 US markets by year end, and possibly Tesla,” the analysts wrote, adding that expanded service areas and new use cases could increase the share of bookings exposed to AV competition.
The analysts also warned that a shift toward more concentrated supply from autonomous fleets could pressure ride-hailing economics.
“The value of a two-sided marketplace is optimized by extreme supply fragmentation, and Uber/Lyft face a future that will likely include more supply concentration,” the analysts wrote, adding that take rates could decline if AVs prove more efficient. T
hey said the market may be underestimating “the negative terminal value impact that AVs may have on the incumbents’ DCF value.”