Meet the Supercharged Growth Stock That Could Make You a Millionaire – Yahoo Finance
When people look for home run investments, they tend to focus on lottery-like types. This is a risky stock with an unproven business, hoping to get lucky and hit the jackpot. Speculative investing is great if it works out, but you might be better off heading to your local casino and betting everything on red or black.
I think it's better to go against the crowd and identify great businesses that the market has doubts about. look what is it Warren Buffett's investment in apple It became.
Contrary to popular belief, you can make a lot of money from established, high-quality companies. Concerns about technology threats are currently causing some well-known growth stocks to trade at compelling valuations. The market appears to be overly pessimistic. multibagger Over a long period of time.
Here's what you need to know about this opportunity Uber Technologies(New York Stock Exchange: Uber).
Since artificial intelligence (AI) entered the spotlight in early 2023, technological innovation appears to be accelerating. The idea of self-driving (self-driving) cars is not new. tesla And Waymo (alphabet) is recognized as a leader in vehicle autonomous driving and has been working on this technology for many years. That said, AI seems to be fueling the wheels of progress.
Tesla CEO Elon Musk said in late 2023 that Tesla will transform the roughly 300,000 lines of programming logic used in vehicle decision-making into neural networks and use AI and machine learning to interpret the data. He pointed out that he was using . Tesla will hold a robotaxi launch event in October 2024, with the goal of launching a fully self-driving ride-hailing service in Texas and California this year.
Waymo goes further than Tesla. The Alphabet-owned company has launched autonomous vehicles in several U.S. cities. It already operates in Phoenix, San Francisco, and Los Angeles, and plans to launch in Austin, Texas. Atlanta; and then Miami.
Investors worry that Uber won't be able to compete with self-driving vehicle competitors that don't have to pay human drivers. Uber's cost of revenue (primarily driver compensation) accounted for 60% of its total revenue through the third quarter of 2024, making it by far the company's largest expense.
The reasons behind these concerns initially make sense, but when you dig deeper, they prove to be flawed.
Investors may be significantly overestimating how imminent the widespread adoption of self-driving vehicles is. First, the technology itself is far from perfect. Waymo has achieved SAE Level 4, which qualifies it for self-driving in some (but not all) situations. Tesla's self-driving technology is still SAE Level 2, which requires human supervision from the driver's seat. Additionally, extensive testing is required for each state and market in which these companies wish to operate, in addition to regulatory and liability issues.
Second, the market doesn't appreciate Uber's home-field advantage. The Uber brand is synonymous with ride-hailing. It has a global presence and has a 76% share of the US market. It's powered by millions of rides worth of user data and established network effects, allowing you to hail an Uber from almost anywhere in minutes. There is no guarantee that people will wait longer for a ride to save money. Convenience is valuable to many people.
I accept that self-driving cars could easily be the future, even if it takes a while. Luckily, Uber has time to prepare. The company has a number of partnerships with self-driving car companies, and recently announced that it would be partnering with a self-driving car company. Nvidia To develop self-driving technology. That means Uber may one day stop using human drivers.
Can you do all these things? What if Will it compete with Uber? Of course, but I wouldn't bet on that.
Uber is down more than 20% from its peak, but business is strong. In Q3 2024, the company had 161 million monthly active users, an increase of 13% year over year. Engagement is also increasing. Total ridership grew by 17%, outpacing user growth. Total revenue for the quarter increased 22% year over year.
The business has also become increasingly profitable in recent years, driving (no joke) even faster revenue growth. Analysts expect Uber's revenue to grow by an average of nearly 42% annually over the long term.
Because of all the concerns about autonomous competition, Uber stock trades at just 33 times earnings. At a fractional PEG ratio (0.8), Uber's stock is surprisingly cheap considering how fast its business is growing.
The stock's valuation is likely to stay where it is, and Uber's growth alone justifies buying the company. If Uber can erase concerns about self-driving vehicles, this stock is poised to double its investment over the next five to 10 years and enrich those who get a little greedy when others are afraid. It looks like.
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Alphabet executive Suzanne Frye is a member of The Motley Fool's board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Nvidia, Tesla, and Uber Technologies. The Motley Fool has Disclosure policy.
