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KEY TAKEAWAYS
- Uber Technologies shares surged 11% Wednesday morning after the ride-hailing firm said it is planning to buy back $7 billion in shares in its first-ever buyback program.
- Uber CFO Prashanth Mahendra-Rajah said the buyback program was “a vote of confidence in the company’s financial momentum.”
- Last week, the ride-hailing app reported its first annual net profit since it went public in 2019.
Uber Technologies (UBER) shares surged 11% Wednesday morning after the ride-hailing firm said it is planning to buy back up to $7 billion in shares in its first-ever buyback program.
Uber Chief Financial Officer Prashanth Mahendra-Rajah said in a statement that “the authorization of the company’s first-ever share repurchase program is a vote of confidence in the company’s strong financial momentum.”
Last week, the leading ride-hailing company reported its first annual net profit since going public in 2019. Along with the earnings release, the company said it planned to announce a plan to return capital to shareholders—opening the door to today’s buyback announcement. Uber said last week it had free cash flow of $3.4 billion in 2023, up from $390 million a year earlier.
Investors tend to like share buybacks as they are tax-efficient, though the lift in a company’s stock following such repurchases is generally temporary.
Separately, thousands of Uber, Lyft (LYFT) and delivery drivers plan to park their cars and picket at major U.S. airports as part of a Valentine’s Day airport strike to demand better and improved working conditions.
Uber shares were up 11.4% at $76.86 at around 12:15 ET Wednesday.