Considering Ditching Amazon? Discover the Powerhouse Investment Option That Warrants Your Attention Instead
Considering Ditching Amazon? Discover the Powerhouse Investment Option That Warrants Your Attention Instead
Without a doubt, we're dealing with a contemporary success story in the form of Amazon. Since its public debut in 1997, the company has experienced an extraordinary growth, skyrocketing approximately 300,000% in value. Despite the fact that the forthcoming three decades probably won't yield returns as substantial, Amazon's expansion into cloud computing keeps it among the most lucrative investment options in the market.
However, there's another stock worth considering for your portfolio. I'm talking about Uber Technologies (Uber with a 2.25% gain). Here's why.
Uber: Cause or effect, the signs are positive
Although the pioneers Travis Kalanick and Garrett Camp didn't completely invent ride-hailing apps, they are widely credited with popularizing the concept. The concept is still gaining traction among consumers as well. With a third-quarter revenue growth of 20%, Uber reinforces existing trends. And let's not forget that the company is also increasingly profitable.
Analysts predict further top- and bottom-line growth in the future.
Speaking of growth, it's only part of the strong case for investing in Uber. The far more significant factor is the cultural reason behind this consistent sales and earnings growth. And that's the decline in car ownership. The same goes for the need to obtain a driver's license.
Stats from the U.S. Federal Highway Administration, as reported by Consumer Shield, underline the narrative. They reveal that the number of domestically registered vehicles dropped from 2001's peak of 138 million to a 20-year low of 97 million in 2022. It's worth pointing out that the COVID-19 pandemic and its impact have contributed to the most recent decline. However, the downward trend had already begun before the pandemic.
You may come across varying data. In particular, you might encounter the commonly cited figure from the Federal Highway Administration, which suggests that there were actually 283.4 million registered vehicles on U.S. roads as of 2022. However, it's important to note that this count includes buses and heavy duty trucks, which are typically owned by governments and corporations for commercial or public service purposes.
The number of cars in individual driveways, on the other hand, has remained relatively stable... at least as a percentage of American households. In fact, Consumer Shield reports that the average American household had 1.83 cars as of 2022, extending a slight decline from 2001's peak of 1.89.
This pattern holds true beyond our borders. Uber is expanding into other markets as well.
Younger generations are embracing a vehicle-less lifestyle
It's hard to imagine this gentle decline reversing anytime soon. A recent poll conducted by Zipcar reveals that more than one-third of Americans are considering not owning a car by 2030. Nearly one in five of these respondents are seriously considering ditching their cars in favor of alternative forms of transportation.
And other data adds weight to this growing disinterest. For example, the Hedges Company forecasts that the U.S. market for light vehicles (sedans, SUVs, excluding commercial trucks) will reach a modest 15.9 million units this year, despite a robust economy and increased post-COVID stability. That's up from 2023's count of 15.5 million, but still significantly below 2016's peak of 17.4 million.
Younger generations are growing up with less interest in car ownership and obtaining a driver's license than their parents. Data from the U.S. Department of Transportation indicates that as of 2022, only about one-fourth of 16-year-olds held a driver's license, compared to half of this age group in 1983. The number of 18-year-old drivers has also plummeted from 80% in 1983 to merely 60% today.
The reasons behind this shift? Cost is one, with the average price of a new car now exceeding $700 per month. Lack of necessity is another. Younger generations are comfortably content with obtaining entertainment and maintaining social connections through a computer. A ride-hailing service like Uber's makes it possible to live and function in an environment where this perspective is increasingly the norm.
And this dynamic can be observed overseas as well. Uber is expanding into new markets internationally.
Two stocks, but Uber's better option
None of this is meant to suggest that investing in Amazon at this juncture is a mistake. It's still a strong move. In fact, in a number of ways, Amazon benefits from the same underlying trend that's driving Uber's growth. That's the growing number of consumers who are comfortable with online shopping and leaving it to Amazon to deliver their purchases. Meanwhile, Amazon's cloud computing business is thriving on a different growth trajectory.
That being said, Uber's stock may be the more promising investment in the short term due to the fact that many investors still underestimate its powerful cultural tailwind and how long it might last. For instance, market research firm Future Market Insight expects the global ride-hailing market to grow at an average annual rate of 15.4% through 2034.
Given its leading position, Uber is well-positioned to capitalize on this growth.
In the context of investment opportunities, Uber Technologies' increasing profitability and strong third-quarter revenue growth of 20% make it an attractive choice. With a decline in car ownership and a shift towards vehicle-less lifestyles, particularly among younger generations, Uber's ride-hailing service aligns perfectly with this trend.
In the realm of finance and investing, Uber's growth potential, backed by cultural changes, could yield significant returns, making it a noteworthy option in investment portfolios.