Uber Technologies Inc. underwent a 12% surge in its stock on Wednesday following the announcement of its first-ever share-buyback initiative.
The company’s board has authorized the repurchase of up to $7 billion worth of stock, propelling the stock toward a potential record close, based on Dow Jones Market Data records dating back to May 10, 2019, which marked Uber’s stock trading debut.
Chief Financial Officer Prashanth Mahendra-Rajah framed this move as a vote of confidence in the company’s financial trajectory.
He emphasized a measured approach to the buyback, starting with actions that offset stock-based compensation and progressing towards a consistent reduction in share count.
The announcement regarding the share-buyback program surfaced during Uber’s virtual investor day, kicking off at 8 a.m. Eastern time.
This development had been foreshadowed earlier, with the company suggesting last week that further details would be disclosed during the investor event.
Uber disclosed its fourth-quarter earnings, unveiling a net income of $1.4 billion. However, a significant portion of this, $1.0 billion, was linked to unrealized gains associated with its equity investments.
Earnings per share reached 66 cents, a noteworthy surge from 29 cents in the corresponding period the preceding year, surpassing the FactSet consensus of 16 cents per share.
Revenue for the quarter rose to $9.9 billion from $8.6 billion, slightly surpassing the FactSet consensus of $9.8 billion.
The company also saw a 22% increase in gross bookings, totaling $37.6 billion, exceeding analysts’ expectations of $37.1 billion. Gross bookings represent the dollar value of transactions for which riders are charged.
Looking forward to the first quarter, Uber forecasts gross bookings in the range of $37.0 billion to $38.5 billion, along with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $1.26 billion and $1.34 billion.
The FactSet consensus had projected $37.4 billion in gross bookings and $1.26 billion in EBITDA.
The stock soared to an intraday high of $77.29, claiming the top spot as the day’s best performer on the S&P 500 and the most actively traded stock within the index.
Over the past 12 months, Uber’s stock has more than doubled, contrasting sharply with the S&P 500’s 21% gain during the same period. This surge highlights the market’s favorable response to Uber’s financial performance and strategic initiatives.
