Uber $UBER expands groceries, retail and high-margin ads driving 44% EBITDA growth in Q4 2024 despite AV concerns

Recent concerns surrounding autonomous vehicle (AV) technology, particularly those amplified by developments at Tesla, have weighed on Uber Technologies’ stock, presenting what could be an opportune moment for investors to consider the company’s robust fundamentals and diversified growth avenues. Despite short-term market jitters, Uber’s expansion into groceries, retail partnerships, and its burgeoning high-margin advertising segment, coupled with strategic forays into AV, position it for sustained profitability gains.

Navigating AV Uncertainties in a Multi-Faceted Business

Autonomous vehicles represent a transformative force in mobility, yet recent volatility in related stocks has sparked broader investor caution. Tesla’s ambitious Robotaxi narrative has dominated headlines, but regulatory hurdles and technological delays have introduced uncertainty, indirectly pressuring peers like Uber. As of 28 August 2025, Uber’s shares traded at $94.41 on the NYSE, reflecting a modest daily decline of 0.97% from the previous close of $95.33, with a 52-week range spanning $59.33 to $97.72. This positioning places the stock near its yearly high, yet below peak levels, underscoring potential value amid the noise.

Uber’s resilience stems from its evolution beyond ride-hailing into a comprehensive platform encompassing delivery, freight, and emerging services. The company’s Q2 2025 results, as reported in financial disclosures, showed revenue surging 18% year-over-year to $12.65 billion, driven by integrated ridesharing and delivery operations. Analysts from J.P. Morgan have highlighted Uber’s ability to leverage AI and autonomy for expansion, maintaining an overweight rating with a price target of $105 as of May 2025. This optimism aligns with Uber’s strategic push into AV, where partnerships rather than outright ownership could amplify margins without the capital intensity of building fleets from scratch.

Profitability Levers: Groceries and Retail Expansion

One of Uber’s key growth drivers lies in its diversification into groceries and retail delivery, segments that tap into shifting consumer behaviours post-pandemic. By integrating these services into its app, Uber has captured a slice of the burgeoning e-commerce market, where convenience meets scale. Historical data from Statista indicates that Uber’s delivery arm, including groceries, contributed significantly to its 2024 full-year gross bookings growth of 18% year-over-year, reaching levels that supported adjusted EBITDA of $1.8 billion in Q4 alone—a 44% increase.

This expansion is not merely additive; it enhances profitability through network effects. Groceries and retail orders often command higher average values than standard food delivery, boosting take rates. For instance, Uber’s collaborations with major retailers have enabled seamless integration, allowing users to order essentials alongside meals or rides. Analyst models from Omdia project the autonomous vehicles market to accelerate through 2025, but Uber’s near-term gains in retail could provide a buffer, with forecasts suggesting delivery revenue could compound at 15–20% annually through 2027, based on consensus estimates from Investing.com.

Moreover, regulatory environments in key markets like Europe pose challenges, such as potential driver reclassifications that could erode margins. Yet, Uber’s adaptive strategies, including pricing adjustments and efficiency drives, have historically mitigated such risks. In Q1 2025, the company reported a 17% revenue increase and surging profitability, with operating margins expanding amid moderated growth deceleration, as per its earnings presentation.

High-Margin Advertising: An Underappreciated Engine

Perhaps the most compelling lever for future profitability is Uber’s advertising business, which operates at enviably high margins and scales with minimal incremental costs. Drawing from its vast user data, Uber has built a retail media network that rivals established players. At CES 2025, Uber showcased innovations in advertising, including partnerships like the one with Delta, emphasising targeted, utility-driven campaigns that blend digital and physical experiences.

Revenue from ads has shown remarkable traction; historical run rates from 2021 pegged Uber Eats’ advertising at $225 million annually, with projections scaling to $2–4 billion in subsequent years if take rates approach those of e-commerce giants. By 2025, this segment is contributing meaningfully to the bottom line, with Beet.TV noting Uber’s leverage of AI for emotional and practical ad placements. Analyst sentiment, as captured by Morningstar, views this as a high-growth area, potentially driving Uber’s overall EBITDA margins towards 20% by 2027, per model-based forecasts.

The advertising model’s allure lies in its defensibility: Uber’s ecosystem provides unparalleled reach, with over 2.6 billion trips in Q1 2024 alone, per App Economy Insights. This captive audience allows for precise targeting, from in-app promotions to sponsored retail listings, generating revenue streams that are less susceptible to AV disruptions.

Strategic Moves in Autonomous Vehicles

While AV fears have centred on Tesla—whose shares stood at $341.86 on 28 August 2025, down 2.21% intraday with a 52-week high of $488.54—Uber is quietly positioning itself as a beneficiary rather than a casualty. The company’s approach emphasises partnerships, such as with self-driving tech firm Waabi, to integrate autonomy into its platform without bearing the full R&D burden. CEO statements from Q1 2025 earnings underscored AV as “the single greatest opportunity ahead,” aligning with trials and expansions detailed in Monexa’s analysis.

Investor optimism is tempered but growing; a Zacks Rank #3 (Hold) reflects caution, yet recent quarters have seen consistent beats, including a 1.57% revenue surprise and 1.61% EPS outperformance. Uber’s forward P/E of 40.00, based on expected EPS of $2.36, suggests a premium valuation, but this is justified by projected free cash flow generation exceeding $10 billion annually, as modelled by internal estimates drawing from 2024’s $6.88 billion net income surge.

SWOT analyses from Investing.com highlight Uber’s market leadership in ride-sharing and delivery as strengths, with AV as a strategic opportunity amid threats like regulatory changes. By 2025, Uber’s gross bookings are guided towards acceleration, with Q2 expectations around $39.5 billion, supporting a narrative of profitable scaling.

Implications for Investors

• Entry Point Analysis: With shares trading at a price-to-book of 8.72 and a 20.41% rise over the 200-day average of $78.41, the current dip may offer value relative to Uber’s 25.57 current-year P/E on EPS of $3.69.
• Risk Considerations: Persistent AV uncertainties and competition could cap upside, but diversification mitigates this.
• Long-Term Thesis: Analyst-led forecasts from J.P. Morgan and others project compounded growth, with AV integration potentially unlocking 30%+ margin expansion by 2030.

In summary, while AV narratives stir volatility, Uber’s multifaceted strategy—spanning groceries, retail, ads, and autonomy—underpins a compelling case for profitability. Investors eyeing this space might find the present juncture particularly intriguing, backed by solid metrics and forward momentum.

References

• App Economy Insights. (2024). Uber Q1 Trip Volume. Retrieved from https://x.com/EconomyApp/status/1788200278438899732
• Beet.TV. (2025). From Digital to Physical: Uber Advertising Campaigns Leverage Utility & Emotion. Retrieved from https://www.beet.tv/2025/08/from-digital-to-physical-uber-advertising-campaigns-leverage-utility-emotion.html
• Business of Apps. (n.d.). Uber Statistics. Retrieved from https://www.businessofapps.com/data/uber-statistics/
• CNBC. (2025). Uber Q1 2025 Earnings. Retrieved from https://cnbc.com/2025/05/07/uber-uber-q1-2025-earnings.html
• Investing.com. (2025). SWOT Analysis: Uber Navigates an Autonomous Future. Retrieved from https://www.investing.com/news/swot-analysis/ubers-swot-analysis-ridehailing-giant-navigates-autonomous-future-93CH-4198374
• Investing.com. (2025). Uber Q1 2025 Presentation. Retrieved from https://www.investing.com/news/company-news/uber-q1-2025-presentation-revenue-up-17-profitability-surges-amid-growth-deceleration-93CH-4027694
• J.P. Morgan. (2025). Analyst Rating & Price Targets – Uber.
• Monexa. (2025). Uber Technologies: Strategic Growth and Autonomous Trials. Retrieved from https://monexa.ai/blog/uber-technologies-strategic-growth-autonomous-tria-UBER-2025-06-12
• Morningstar. (2025). Uber Advertising Outlook and Profitability Forecast. Retrieved from https://morningstar.com/news/dow-jones/202505207300/uber-shares-hit-all-time-high-on-autonomous-vehicle-outlook-short-term-profitability
• Omdia. (2025). Autonomous Vehicles Market Outlook. Retrieved from https://omdia.tech.informa.com/om013220/autonomous-vehicles-market
• Statista. (2024). Uber Technologies Key Metrics. Retrieved from https://www.statista.com/topics/4826/uber-technologies/
• Uber. (2024). Q4 and Full-Year 2024 Results. Retrieved from https://investor.uber.com/news-events/news/press-release-details/2025/Uber-Announces-Results-for-Fourth-Quarter-and-Full-Year-2024/default.aspx
• Uber. (2025). Uber Advertising at CES 2025. Retrieved from https://www.uber.com/blog/uber-advertising-at-ces-2025-innovation-and-impact/
• WebProNews. (2025). Uber’s Q2 2025 Revenue Soars. Retrieved from https://webpronews.com/ubers-q2-2025-revenue-soars-18-to-12-65b-amid-ai-and-autonomy-push