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Uber’s ride to success (Investing blog)

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Milford Asset Management

01 April 2024, 7:00 PM

Uber’s ride to success (Investing blog)

Milford, in managing its Investment Funds and KiwiSaver Plan, is constantly analysing the financial performance and prospects of many of the world’s leading companies to assess their suitability as possible investments. Here Milford Investment Analyst Dr Deborah Lambie discusses Uber. 

Uber can be thought of as the largest transportation company in the world. It has been a pioneer in the ride-hailing and broader gig economy. 

Uber has around 6 million drivers completing an average 25 million trips a day, across 70 countries. This is equivalent to every single person in New Zealand taking five trips per day! 

Uber shares have had a stellar run and are up 125% over the past 12 months. This actually comes after a tough period of time for the shares. From when Uber listed back in 2019 to the end of 2022, its shares almost halved. This was driven by: Covid - where the volume of rides fell almost 80%; regulatory concerns around drivers’ pay; and a large group of sceptics who just didn’t believe Uber could generate a profit. 

But fast forward to now, Covid is behind us, Uber’s food delivery business Uber Eats has become a global leader, and the company has delivered three consecutive quarters of profits, with some of the profits now being returned to investors through share buybacks. Uber has proven its significant scale across many geographies, and the dual service of mobility and delivery, provide a competitive advantage. It is expected to grow its earnings at over 50% per year over the next three years. This is attracting a new cohort of long-term investors who are buying Uber for its compounding earnings growth. These factors have driven the strong recent share price rally and the new all-time high share price.

This profitability inflection has been driven by three main factors. Firstly, coming out of Covid, we have now seen a full recovery of Uber rides, which is the most profitable part of the business. Secondly, Uber can generate more revenue per customer because it has both rides and delivery on the same platform. Finally, Uber has cut back-office costs significantly.

Looking forward, Uber’s advertising business is also showing a lot of promise for the future. It is still small but has been gaining traction and is highly profitable. Uber is currently benefitting from the “network effect”. As its user base grows, demand for rides and drivers increases, which in turn leads to an increase in the supply of drivers, which in turn improves service received by users, driving continued user base growth (and so on). Ultimately this flywheel effect accelerates growth and Uber’s earnings.

Uber has recently been included in the S&P 500 index which is driving a higher quality, long-term shareholder base, attracted to Uber’s strong growth outlook and competitive advantage. Plus, Uber’s profitability and cash flow generation is accelerating, which will be returned to shareholders through increasingly large share buybacks – all of these have also contributed to Uber’s strong share price performance. However, it is important to be aware there are several risks around an investment in Uber that Milford remains acutely focused on - competition is heating up, there is regulatory scrutiny especially around its classification of drivers, and systems to ensure the safety of both its drivers and riders is paramount. It’s a rapidly evolving space, that we are actively monitoring.

If you would like to talk with any of Milford’s Wanaka-based Wealth Management team, please feel free to get in touch on 03 443 4695. Financial Adviser Disclosure Statements are available on request free of charge. 

Disclaimer: Past performance is not a reliable indicator of future performance. Milford Funds Limited is the issuer of the Milford KiwiSaver Plan and Milford Investment Funds. Please read the relevant Milford Product Disclosure Statement at Before investing you may wish to seek financial advice. For more information on our financial advice services please visit

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Tel: 03 443 4695