Uber’s stock witnessed a significant surge on Wednesday, with the ride-hailing company announcing its plans to buy back up to $7 billion worth of company shares. This news has come as a breath of fresh air for the company, which has been striving to get back on its feet amid the pandemic.
In a press release on Wednesday morning, Uber CFO Prashanth Mahendra-Rajah expressed his confidence in the company’s strong financial momentum, stating that the share repurchase program is a “vote of confidence” in Uber’s future growth prospects. Mahendra-Rajah added that Uber will be careful and thoughtful regarding the pace of its buyback, starting with actions that partially offset stock-based compensation and working towards a consistent reduction in share count.
This buyback announcement comes on the heels of Uber’s impressive Q4 2020 results, which surpassed Wall Street’s earnings and revenue expectations. In an interview on February 7, CEO Dara Khosrowshahi stated that 2023 will be a year of “sustainable, profitable growth” for Uber, citing a shift in consumer spending from retail to services as a key driver of the company’s performance.
According to Uber’s Q4 2020 earnings report, the company’s mobility segment revenue was up 34% from the previous year, while its delivery segment’s revenue was up 6% from the same period. This marks a significant improvement for the company, which faced immense challenges in 2020 due to the pandemic-induced lockdowns and travel restrictions.
Overall, Uber’s share buyback program is a positive step forward for the company and a testament to its commitment to long-term growth and profitability. With this move, Uber is signaling to its investors that it is confident in its financial stability and future prospects, even amid the ongoing uncertainty caused by the pandemic.
(Source: Bloomberg | Investor’s Business Daily | CNBC)
