Uber (UBER) Stock Surges as IBD Stock of the Day Amid Tesla Robotaxi Reveal
Uber Technologies (UBER) was named the IBD Stock of the Day on Friday as its shares rallied past a key buy point. The ride-hailing giant saw its stock surge over 7% to $84.02, spurred by investor relief after Tesla’s (TSLA) robotaxi announcement, which one analyst described as more “toothless” than initially feared.
Uber stock broke out of a six-month consolidation pattern, surpassing the 82.14 buy point, while its competitor, Lyft (LYFT), also jumped 8%, reaching 13.39. In contrast, Tesla shares fell 8% to 218.50.
For over six months, investors have been concerned about how Elon Musk’s plan to introduce Tesla robotaxis might impact Uber’s dominant position in the ride-hailing market. However, Tesla’s “We, Robot” event on Thursday night eased those concerns. While Musk unveiled a new “CyberCab” and claimed that full self-driving could launch next year in Texas and California, he offered few concrete details on Tesla’s ride-hailing strategy.
In a note to clients, Jefferies analyst John Colantuoni called the event “a best-case outcome for Uber,” citing the lack of specific information or verifiable progress toward Level 3 autonomous driving. “We expect Uber to react positively now that investors can refocus on the company’s fundamentals,” Colantuoni wrote.
Uber’s Autonomous Vehicle Partnerships
Uber has positioned itself as a key platform for autonomous vehicle (AV) developers, with partnerships including Google’s Waymo, GM’s Cruise, and Avride, among others. Through these collaborations, Uber aims to integrate autonomous vehicles into its app, expanding its market potential.
Jefferies analysts highlighted that robotaxis could greatly increase Uber’s mobility market. With the rise in supply of autonomous vehicles, ride-hailing costs could drop, leading to expanded use cases for Uber’s services over time.
Tesla, meanwhile, may be underestimating the hurdles involved in scaling a robotaxi fleet, including technological challenges, regulatory issues, fleet management, and customer demand, according to Colantuoni.
Morgan Stanley analysts echoed these sentiments, stating the event was “light on details” and did not suggest any immediate acceleration in autonomous vehicle adoption.
Caution for Uber: CyberCab’s Low Cost
There were some concerns raised for Uber, particularly regarding the potential low cost of Tesla’s CyberCab. Musk claimed the service could cost as little as 20 cents per mile, which could undercut Uber’s driver-based pricing, warned BofA Securities analyst Justin Post. However, Post also noted that Tesla’s event offered “less concrete details and timelines than initially feared.”
Uber Stock Breaks Out
With Friday’s jump, Uber stock surged beyond its 82.14 buy point from a consolidation pattern, as identified by IBD MarketSurge, putting shares back into record territory for the first time since March. Uber’s Relative Strength line also reached its highest level since earlier this year.
Uber holds an IBD Composite Rating of 81 out of a possible 99, reflecting strong growth potential. The Composite Rating combines multiple proprietary ratings into a single score, with the best growth stocks typically having a score of 90 or higher.
Looking ahead, Uber is scheduled to report its third-quarter earnings on October 31. Analysts expect earnings to rise 270% year-over-year to 37 cents per share, with revenue projected to grow 18%.