Anticipated Recovery: Stock Showing Signs of Collapse set to Regain Strength and Surpass Palantir's Value by 2025's Close
Anticipated Recovery: Stock Showing Signs of Collapse set to Regain Strength and Surpass Palantir's Value by 2025's Close
Over the past year, Uber Technologies' shares have seen a modest gain of approximately 9%, falling short of both the S&P 500 and Nasdaq Composite's performances. Despite this, I'm not ready to write off Uber just yet. Let me explain why I believe Uber shares are poised for a strong comeback in 2025, possibly surpassing even Palantir Technologies' top-performing stock of 2024, PLTR.
What's Going on with Uber Stock?
Uber's share price has had a rollercoaster ride over the past year. It dipped by about 7% through August and September, but then dramatically rebounded in October, skyrocketing by as much as 37%. However, the excitement was short-lived, as shares began to plummet in December due to concerns surrounding autonomous driving fleets.
The primary cause of Uber's December sell-off was Alphabet's autonomous vehicle subsidiary, Waymo, partnering with a startup named Moove. This new partnership left investors questioning why Waymo would partner with someone else in the ride-hailing space, especially considering Uber's dominance in the sector.
Are These Concerns Overblown?
While it's understandable why investors may panic over Waymo's decision to partner with Moove, there are several factors that should be taken into account before making hasty assumptions.
First, it's essential to remember that Uber is a diverse company with multiple revenue streams. While ridesharing remains its largest source of income, Uber also operates delivery platforms like Drizly and Postmates, focusing on alcohol and food delivery, respectively. Uber's massive global footprint, operating in over 70 countries, is another significant advantage.
Second, it's highly unlikely that Waymo or any other robotaxi operator will replace Uber's mobility business overnight. The adoption of autonomous vehicle fleets is still in its infancy, making it an extended process that will roll out on a city-by-city basis over time.
Last but not least, Uber has the potential to form strategic partnerships with other companies to maintain its position in specific urban environments. Collaborations with players like Waymo or Tesla could prove beneficial in this regard.
Why Uber Could Surpass Palantir by Year-End
As of January 16, 2025, Palantir's market capitalization sits at around $160 billion. This translates into a price-to-sales (P/S) ratio of 62 and a price-to-earnings (P/E) ratio of 341. By contrast, Uber's stock trades at a lower P/S multiple of 3.4 and a P/E ratio of 33, hovering near its all-time lows.
The rationale behind Uber's undervaluation lies in the market's narrative that autonomous vehicles will eat into Uber's ride-hailing market share. While this may eventually become a reality, so far, the narrative has not been substantiated.
Investors may soon realize that Uber is still a strong contender in the long-term mobility market across various sectors. As such, I anticipate that the stock will regain favor with investors and make a significant rebound in 2025.
Palantir, on the other hand, has established itself as a top player in the artificial intelligence (AI) sector. However, its skyrocketing valuation raises concerns for analysts. Morgan Stanley, for instance, has set a $60 price target for Palantir, significantly lower than its current stock price. This indicates a substantial correction in Palantir's stock price over the past 18 months.
Given these factors, I believe Uber will surpass Palantir's market value by year-end.
Enrichment Data:While Uber's stock faces uncertainty due to the potential disruption with autonomous vehicles, Palantir's stock is primarily overshadowed by concerns regarding its valuation. Analysts predict that the stock may be due for a pullback or normalization in value due to its high valuation multiples.
Uber's financial strategy could include diversifying its investment portfolio, seeking opportunities in sectors like autonomous delivery or partnering with other tech giants to strengthen its position in the market. This approach to finance could help mitigate potential losses from autonomous vehicles and ensure a stable return on investing in Uber shares.
Should the market recognize Uber's long-term potential in the mobility sector and the undervaluation of its shares, a significant increase in investment activity could be observed. This increased interest could drive the stock price up, potentially surpassing Palantir's high-valued shares based on market capitalization.