The Federal Trade Commission filed a lawsuit Monday against Uber, alleging the ride-hail and delivery giant charged customers for its Uber One subscription service without their consent. The lawsuit also claims Uber failed to deliver the savings promised in its subscription service and made it unreasonably difficult for users to cancel despite its “cancel anytime” promises.
Uber falsely claimed that users would save about $25 a month through the service, the FTC said.
The FTC's suit alleges that some customers who signed up for a free trial were automatically charged for the service before their trial ended.
Uber (UBER) has received quite a bit of attention from Zacks.com users lately. Therefore, it is wise to be aware of the facts that can impact the stock's prospects.
Uber is set for a stellar Q1 2025, with pricing strength and robust volume growth. Needham Research data shows Uber's pricing hit all-time highs in Q1 2025. Meanwhile, MAPCs are expected at 165-170 million and total trips at 2.9 billion. Analysts forecast Q1 revenue at $11.5 billion (+14% YoY), with Mobility at $6.5 billion (+16% YoY) and Delivery at $3.7 billion (+16.1% YoY).
Uber is a highly defensible business with strong growth potential, evidenced by its recent outperformance over the market. The company's integration with Waymo and robust network effects strengthen our bullish stance. Historically, Uber's growth and profitability have been key drivers, but now the stock also appears to be a solid platform for selling high-yield put options.
Pershing Square CEO Bill Ackman — who disclosed in a Thursday (April 17) post on X that the firm owns a 19.8% stake Hertz — said in the post that Hertz and Uber would be ideal partners to roll out a fleet of autonomous vehicles (AVs).
I rate Uber as a Strong Buy due to positive catalysts like Trump tariffs, which could boost demand for ride-hailing services. Autonomous vehicles are overhyped; Uber's established platform and user base give it a competitive edge, even with new tech entrants. Uber's capital-light model, growing user base, and expansion into high-margin areas make it undervalued, with a PEG ratio well below the sector median.
Uber's strong financial performance and extensive network make it a resilient player despite fears of disruption from autonomous vehicles. Autonomous vehicle (AV) technology poses long-term risks, but partnerships with companies like Waymo ensure Uber's critical role in the driverless market. Tesla's potential entry into ride-hailing is a concern, but Uber's established network and brand value offer significant competitive advantages.
Uber has outperformed the S&P 500 in 2025, with shares up 21% YTD, driven by strong Q4 results and growth initiatives. I reiterate a buy rating and raise my price target, despite a neutral technical chart, due to Uber's impressive relative strength and growth prospects. Key risks include competition, regulatory challenges, and potential margin pressures, but Uber's valuation remains attractive with a promising long-term EPS growth rate.
Uber's share price has remained relatively flat in recent months even as the equity market and its peers are under significant pressure. Bill Ackman's stake disclosure is partially to blame. However, it does not appear to be the only factor at play. Relative valuation against peers shows that Uber is offering a margin of safety that its peers do not.
Uber's stock appears undervalued by 28.58% based on DCF analysis, with a projected 15% revenue growth and strong free cash flow margins. Uber leads in ridesharing and food delivery, showing significant profitability in 2024 and diverse revenue streams, including advertising and subscriptions. Key growth areas include freight digitalization and autonomous vehicles, though risks like competition, regulatory changes, and economic conditions remain.