Hailed as one of the biggest success stories in tech, Uber (NYSE: UBER) has had an interesting year.
Uber stock experienced significant volatility in 2024 — at the beginning of the year, prices shot up from $57 to $81 in mid-February, before entering a gradual decline to $63.97
Following this, Uber shares reached a yearly low of $58.48 in early August. However, prices rebounded following a standout earnings quarter, which saw a beat in terms of both revenue and earnings per share (EPS), as well as Uber’s advertising division reaching a $1 billion annual revenue run rate.
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After Tesla (NASDAQ: TSLA) held its disappointing ‘Robotaxi day’ event on October 10, Uber shares reached an all-time high of $86.34. However, a vast majority of those gains have been erased. A slight slowdown in bookings, Waymo’s expansion into critical markets like Miami, and an incoming administration that will almost assuredly be favorable to Tesla have led to a 26.44% drop.
At press time, Uber stock was trading at $63.51 — over the last thirty days, share prices have dipped by 11.02% — and 7.27% of those losses occurred over the last week.
There’s a reason that Uber’s fortunes seem to be inversely proportional to Tesla’s — as tech companies, both have high valuations that already price in a lot of growth. The only way to maintain stock prices or see them rise is to consistently expand — the next big advancement in transit, self-driving is increasingly looking like a ‘winner takes all’ scenario.
Notably, one of the contenders in the space has just pulled out — in a move that doesn’t bode well for Uber.
Uber stock falls as General Motors scraps autonomous division
General Motors (NYSE: GM) released a statement on December 10, in which it revealed plans to realign its autonomous driving strategy. Funding for the company’s autonomous division, Cruise, will stop — from now on, GM will be focusing its efforts on advanced driver assistance systems in the near term, and autonomous driving for personally-owned vehicles in the longer term.
This leaves two likely contenders in the ‘winner takes all’ scenario — Waymo and Tesla, as noted by Deepwater Asset Management managing partner Gene Munster in a December 10 X post.
Companies like Uber and Lyft (NASDAQ: LYFT) are left with reduced bargaining power — the fewer competitors, the greater the pull of Waymo and Tesla in any future synergies between autonomous driving and ride-hailing or ridesharing.
In another example of corporate consolidation, the market’s prospects are quite grim in that regard — at best, a duopoly, and at worst, a monopoly seems to be in the cards. Both of those possibilities severely curtail the ability of companies like Uber and Lyft to profit from the next frontier in transportation.
Lyft stock also saw a comparable decline, equating to a 10.92% loss over the last five trading days, and a 4.76% decline on the daily chart.
Still, it is important to note that we’re talking in terms of probabilities here — nothing is set in stone, and Uber’s past successes with branching out into different revenue streams, like in the example of its advertising division, speak to a capability to adapt to shifting circumstances.
Featured image via Shutterstock
