Why Uber's Drop Could Be a Golden Entry Opportunity for 2025

Key Points

• Shares of Uber have dropped more than 25% from October's all-time high.
• However, the company smashed expectations with its latest earnings report, and analysts are bullish.
• The risk/reward profile is quite attractive, and investors should be excited. 

Shares of Uber Technologies Inc NYSE: UBER were cruising at all-time highs as recently as October. They've slipped considerably since then, and for investors, this will be frustrating. Shares of the ride-hailing giant have fallen a full 25%, with a particularly painful 10% drop last week. This was largely due to news of Waymo's expansion of its driverless taxis into Miami, which has many investors concerned about increased competition.

However, while it might sting in the short term, Uber's stock is still consolidating well within the range it spent much of the year in. As we head into the last couple of weeks of the year, with broader markets hitting fresh highs and a more favorable macro environment taking shape, this could be the time to be brave. Let's jump in and take a look. 

Uber’s Fundamental Performance Shines With Record Earnings

To start with, Uber's recent fundamental performance has been fairly strong all year. The company smashed expectations with its latest earnings report in October, delivering a particularly strong showing for both revenue and earnings. 

Uber's revenue print was its highest ever, while earnings landed 200% higher than analysts had forecast, helping to drive income from operations up a massive 55% year-over-year.

The company's leadership struck an understandably bullish tone with the release, saying, "We delivered yet another record quarter of profitable growth at a global scale while delivering over $1 billion in GAAP operating income for the first time in our company's history."

While competition from Waymo is heating up, the numbers don't lie—Uber is growing fast and delivering on profitability goals. It should be more than capable of staying competitive. 

Bullish Analyst Updates Signal Strong Confidence in Uber’s Potential

It's worth noting that several analysts are bullish on Uber, even in the face of its recent drop. In a note to clients last week, the team over at JMP Securities reiterated their Market Outperform rating, along with a $95 price target.

This bullish sentiment echoes similar updates from DA Davidson, Loop Capital, and Tigress Financial over the past month. The latter, in particular, is setting the bar high with a $103 price target, pointing to a targeted upside of nearly 60% from where the stock closed last night.

Given the stock is down nearly 30% from October's high, this kind of bullish outlook should get investors excited. 

Profitability Questions Linger Despite Record Revenues and Operating Income

Of course, there are still concerns that Uber will need to address. Despite the broader market setting fresh highs, the company's inability to push higher from its October peak could be a red flag for some.

There's also Uber's profitability question. While the company is printing record revenues and operating income, it's yet to reliably deliver consistently profitable quarters. The EPS miss earlier this year remains a sore point, and Uber will need a strong start to 2025 to dispel any doubts around this. 

Uber’s Strong Brand and Market Share Poised for a Strong 2025 Start

However, you can't ignore the fundamental momentum in place or the optimistic analyst outlooks. From a technical perspective, Uber's setup shows all the signs of a stock ready to rally again. After last week's drop, its Relative Strength Index (RSI) currently sits at 33, indicating the stock is oversold and nearing extreme territory.

For context, the RSI measures the speed and magnitude of recent price changes, with levels below 30 suggesting the stock is heavily oversold. With Uber's RSI hovering just above that mark and bears unable to push shares below last week's low, they could soon start running out of steam. This would put the bulls back in control, with any close above $67 likely confirming the rally is back on. 

There's no doubt investors are a little spooked by Waymo, but competition is good and, in many ways, should be welcomed. Uber has a strong brand, incredible market share, and enough fundamental momentum to start 2025 on the offensive. Last week's drop could well come to be looked back upon as a golden entry opportunity ahead of fresh highs in the new year.