Uber Announces Share Buyback Plan

Uber Technologies has announced its first-ever share buyback plan, marking a significant milestone for the ride-hailing and delivery company. After years of burning through cash, this move demonstrates Uber's commitment to enhancing shareholder value.

The news of the share buyback has already had a positive impact on Uber's stock, with shares experiencing a 5.6% increase in premarket trading, reaching $72.68. This gain adds to the 12% surge witnessed this year, following an impressive earnings report that exceeded market expectations.

Investor sentiment towards Uber has turned around significantly, as the company's stock has risen by 90% over the past 12 months. Notably, Uber achieved its first annual operating profit during this period and also became a part of the S&P 500 index. This repurchase program appears to be part of Uber's ongoing efforts to charm investors and counteract the dilution caused by stock-based compensation.

In 2023, Uber's stock-based compensation expenses for employees (excluding drivers) increased to $1.94 billion from the previous year's $1.79 billion. Prashanth Mahendra-Rajah, Uber's chief financial officer, emphasized the company's intention to approach the buybacks thoughtfully, initially using them to offset stock-based compensation and subsequently aiming for a consistent reduction in the number of outstanding shares.

Uber's decision to implement a share buyback is reflective of a wider trend among technology companies to prioritize capital returns as interest rates rise. A recent example is Meta Platforms (formerly Facebook), which also announced its first-ever dividend earlier this month.