Hook / Thesis
Uber pulled back into the mid-$80s after a sizable run-up; that dip looks like a reasonable tactical entry. The company reported 3Q fiscal 2025 (period ended 09/30/2025) revenue of $13.467B and continued to convert a chunk of that into cash: operating cash flow was $2.328B in the quarter. Sequential revenue and cash-flow trends point to durable demand in rides plus an accelerating delivery business, which is still under-monetized relative to user counts and platform scale.
My trade idea: accumulate shares on weakness with a clearly defined stop and targets. The risk is real - valuation is not cheap - but current fundamentals (revenue up, operating income positive, strong cash conversion) plus visible catalysts make a defined, size-controlled long the highest-probability near-term trade.
Why the market should care
Uber is a two-sided mobility and delivery platform with 180M+ monthly users and a global footprint. The business benefits from network effects: more riders and diners attract more drivers and couriers, which improves availability and retention. That scale matters when monetization improvements roll out, whether via delivery unit economics, advertising on the platform or premium ride services.
In the most recent quarter (ended 09/30/2025), revenues were $13.467B, up from $11.188B in the comparable quarter a year earlier - roughly a 20% year-over-year increase for the quarter. Sequentially revenues rose from $12.651B in Q2 2025 and $11.533B in Q1 2025, showing consistent growth through the year.
What the numbers say - fundamentals
- Revenue growth: Q3 2025 revenue $13.467B vs Q3 2024 $11.188B - about +20% YoY for the quarter; sequential growth across Q1-Q3 2025 supports an accelerating top line.
- Operating profitability: Operating income in Q3 2025 was $1.113B. That follows $1.45B in Q2 2025 and $1.228B in Q1 2025, indicating consistently positive operating profits even as the company invests in growth areas.
- Cash generation: Net cash flow from operating activities was $2.328B in Q3 2025 and the company reported positive net cash flow of $1.816B in the quarter. Strong free-cash potential gives management optionality on share repurchases, M&A or strategic investments.
- Balance sheet: As of Q3 2025 total assets were $63.344B and equity was $28.997B. Current assets $15.139B versus current liabilities $13.121B provides short-term flexibility.
- Net income caveat: Q3 2025 reported net income attributable to parent was $6.626B—but that included large tax benefits and non-operating items (income tax benefit of about $4.046B and nonoperating income $1.619B). The core operating profile is better judged by operating income and operating cash flow.
Valuation framing
There’s no single “correct” valuation here, but a quick, transparent approximation helps the trade.
Using diluted average shares reported for Q3 2025 (~2.124B shares) and a recent share price around $84.12 (last trade in the snapshot), an implied market-cap estimate is roughly $178B (2.124B shares * $84). That is an approximation - diluted average shares are not the same as shares outstanding at market close, so treat the number as directional.
Annualizing the recent quarterly revenue run (sum of the last three quarters: Q1 2025 $11.533B + Q2 2025 $12.651B + Q3 2025 $13.467B = $37.651B and multiplying by 4/3 to annualize) yields an approximate $50.2B run-rate revenue. That implies an approximate revenue multiple near 3.5x (178/50.2). For a high-growth platform with SaaS-like gross margins on delivery and material ad/merchant monetization potential, a mid-single-digit P/S isn’t obviously indefensible - but it requires continued execution on margin expansion and new revenue streams.
Bottom line: valuation looks demanding versus slower-growth peers but reasonable if delivery monetization, advertising, and operating leverage continue to accelerate. The market is pricing in execution; the trade is therefore conditional on milestones and catalysts below.
Catalysts (what to watch)
- Delivery acceleration: sustained sequential revenue growth and improved contribution margins from Eats (expecting continued recovery and higher take-rates).
- Advertising and merchant monetization rollouts - incremental high-margin revenue that can meaningfully lift operating margins.
- Operating leverage: evidence that other operating expenses grow slower than revenue, lifting operating margin above current levels (Q3 operating margin roughly 8-11% depending on quarter).
- Capital allocation: any program to repurchase shares once cash-flow consistency is proven would support EPS and valuation.
- Autonomy/physical AI partnerships highlighted at industry shows - credible pilot commercial wins that justify future TAM expansion (robotics, autonomous delivery, and related revenue opportunities).
Trade plan - actionable
- Direction: Long - buy the dip.
- Entry: Add in the $80 - $86 range. If you want a staggered approach, tranche in 50% at $84 and the remainder towards $80 if price declines.
- Stop: $74 - roughly 10% below the mid-entry and below recent technical support. If stop hit, exit and reassess on fundamentals or a clear change in the competitive/ regulatory picture.
- Targets:
- Near-term target: $100 (near recent multi-month highs and a logical resistance zone) - first exit zone for traders looking for a 15-20% bounce.
- Stretch target: $120 for position holders if catalysts play out (new high-margin revenue streams and visible margin expansion) - implies further re-rating.
- Position sizing & risk: Keep exposure moderate (size so that a stop loss equates to no more than 1-2% of total portfolio value). Risk level: medium. This is a cash-flow generating, large-cap company, but valuation and execution risks remain.
Risks and counterarguments
There are several legitimate reasons the trade could fail; be explicit about them.
- Execution risk: Delivery unit economics are nuanced. If Eats margins do not improve with scale (or if discounts/promotions continue to compress contribution), the valuation premium will be hard to justify.
- Regulatory / labor risk: Driver/courier classification changes or new gig-labor rules could raise costs materially in key markets, pressuring margins and cash flow.
- Valuation sensitivity: The stock trades at a premium that assumes both monetization upside and operating leverage. If revenue growth slows or margin expansion stalls, downside can be swift.
- One-time accounting items: Recent quarterly net income included large tax benefits and non-operating items. Those can reverse and make headline earnings volatile; focus on operating income and cash flow for the health of the business.
- Competition and pricing pressure: Food delivery and mobility remain competitive. Market share fights via pricing or promotions could blunt margin expansion.
Counterargument: The market is already pricing a high bar. If you believe that monetization gains (ads, higher take-rates, merchant fees) and margin expansion are more uncertain than management suggests, this is not a buy - it's a valuation trap. Waiting for clearer proof (several quarters of margin improvement or a capital-return program) is defensible.
Conclusion - my stance and what would change my mind
I am recommending a tactical long - buy-the-dip with a disciplined stop and clearly scoped position size. The combination of accelerating revenue (Q3 2025 $13.467B, +~20% YoY for the quarter), positive operating income ($1.113B) and strong operating cash flow ($2.328B) supports a trade where upside is tied to delivery monetization and operating leverage.
What would change my mind? Negative signs that would force me to flip to neutral or bearish include: two or more quarters of decelerating revenue growth, sustained decline in operating cash flow, a material regulatory/labor cost shock, or evidence that Eats contribution margins are not improving despite rising volumes. Conversely, sustained margin improvement, confirmed advertising revenue growth, or an explicit cash-return program would increase conviction and prompt adding to position.
Published: 01/15/2026. Author: Nina Shah, Financials Analyst.