Uber Technologies shares were gaining after it announced its first-ever share buyback plan. It’s a milestone for the ride-hailing and delivery company after years of burning cash.
Uber
said Wednesday its board has announced the repurchase of up to $7 billion worth of stock. That compares with its market capitalization of $142.2 billion as of Tuesday’s close.
Shares were up 8.7% at $74.97 in early trading. That would add to a 12% gain this year so far, after Uber’s latest earnings report beat expectations.
After years of being out of favor with investors due to being consistently unprofitable, Uber is up 90% over the last 12 months. During that period it reported its first annual operating profit and joined the
S&P 500.
The implementation of stock buybacks looks to be part of a continued charm offensive and could play a crucial role in reducing the dilution caused by stock-based compensation.
Uber’s stock-based compensation expenses for its employees—which doesn’t include drivers using its app—rose to $1.94 billion in 2023 from $1.79 billion in 2022.
“We will be thoughtful as it relates to the pace of our buyback, beginning with actions that partially offset stock-based compensation, and working towards a consistent reduction in share count,” said Prashanth Mahendra-Rajah, Uber’s chief financial officer, in a statement.
The move underlines the shift toward technology companies promising capital returns amid higher interest rates, similar to Facebook-owner
Meta Platforms
promising its first ever dividend earlier this month.
Write to Adam Clark at [email protected]
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