Uber Announces $1.5 Billion Accelerated Share Repurchase Program

Rhea-AI Summary

Uber Technologies (NYSE: UBER) has announced a $1.5 billion accelerated share repurchase (ASR) agreement with Bank of America, as part of its previously announced $7.0 billion share repurchase authorization. The company will initially receive 18,578,727 shares, representing approximately 80% of the expected total repurchase under this ASR agreement.

The final number of shares to be repurchased will be determined by the volume-weighted average price of Uber stock during the agreement term, less a discount. The ASR program is expected to complete in Q1 2025. According to CFO Prashanth Mahendra-Rajah, Uber expects to continue scaling free cash flows significantly in 2025, enabling capital return to shareholders while maintaining growth investments. The company views its stock as undervalued relative to business strength and plans to accelerate buybacks under the existing authorization.

Positive

• Significant $1.5B share repurchase program retiring over 1% of market cap
• Strong free cash flow growth expected in 2025
• Part of larger $7.0B share repurchase authorization
• Management confidence in business strength indicated by buyback acceleration

Negative

• Significant cash outlay of $1.5B reduces available capital for operations or investments

Insights

Financial Analyst

This $1.5 billion accelerated share repurchase (ASR) program marks a strategic shift in Uber's capital allocation strategy, reflecting management's confidence in the company's cash flow generation capabilities. The ASR's structure, with an initial 80% share delivery followed by a variable completion based on VWAP, provides immediate EPS accretion while protecting against short-term price volatility.

The program will retire approximately 1.1% of outstanding shares at current market prices, enhancing shareholder value through reduced share count. More importantly, this represents only the first tranche of the broader $7 billion authorization, suggesting sustained buyback activity throughout 2025. The discount negotiated with Bank of America adds further value, effectively lowering the average purchase price below market rates.

The timing is particularly strategic - initiating the buyback at the start of 2025 capitalizes on current valuation levels while demonstrating management's bullish outlook on free cash flow generation. This move typically signals management's view that the stock is undervalued relative to fundamentals and future growth prospects.

Corporate Finance Strategist

The execution of this ASR demonstrates sophisticated treasury management, leveraging the company's strong balance sheet position to enhance shareholder returns. By accelerating the repurchase through a structured agreement rather than open market purchases, Uber gains several advantages: immediate share count reduction, price certainty for a portion of the program and protection against potential market volatility.

The decision to deploy $1.5 billion upfront while maintaining flexibility for the remaining $5.5 billion authorization shows prudent capital management. This balanced approach allows Uber to maintain strategic flexibility for potential growth investments while still delivering on shareholder return commitments. The expected Q1 2025 completion timeline suggests efficient execution without creating undue market pressure.

Market Research Analyst

This buyback announcement sends a powerful market signal about Uber's financial health and management's confidence in future cash flows. The stock's immediate reaction should be positive, as the program effectively creates a price floor and signals management's view of undervaluation. The structure of acquiring 18,578,727 shares initially provides clear metrics for market participants to evaluate the program's immediate impact.

Think of this as a company putting its money where its mouth is - instead of just saying the stock is undervalued, they're actively buying it. For retail investors, this program essentially means they're now co-investing alongside the company itself. The discount negotiated in the ASR agreement adds another layer of value creation, effectively allowing the company to acquire shares below current market prices.

SAN FRANCISCO--(BUSINESS WIRE)-- Uber Technologies, Inc. (NYSE: UBER) today announced that it has entered into an accelerated share repurchase (“ASR”) agreement with Bank of America, N.A. (the “dealer”) to repurchase $1.5 billion of shares of Uber common stock, as part of its previously announced $7.0 billion share repurchase authorization.

“We are entering 2025 with considerable momentum and expect to continue scaling our free cash flows significantly, enabling us to return meaningful capital to shareholders while still investing in growth,” said Prashanth Mahendra-Rajah. “Our stock is undervalued relative to the strength of our business, and we plan to accelerate our buybacks under the existing authorization as a result. This ASR represents a value-enhancing deployment of capital, retiring over one percent of our market cap.”

Under the ASR agreement, on January 6, 2025, Uber will pay $1.5 billion to the dealer and expects to receive an initial delivery of 18,578,727 shares of Uber common stock, representing approximately 80% of the shares of Uber common stock it expects to repurchase under the ASR agreement. The total number of shares to be repurchased by Uber pursuant to the ASR agreement will be based on the volume-weighted average price of Uber common stock on specified dates during the term of the ASR agreement, less a discount, and subject to customary adjustments pursuant to the terms and conditions of the ASR agreement.

The transactions under the ASR agreement are expected to be completed during the first quarter of 2025.

Forward-Looking Statements

This press release contains forward-looking statements regarding our future business expectations which involve risks and uncertainties. These statements include, but are not limited to, statements concerning the terms, timing and completion of the accelerated share repurchase program, and expectations regarding free cash flow and future share repurchases. Actual results may differ materially from the results predicted. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “hope,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. For information on potential risks and uncertainties that could cause actual results to differ from the results predicted, please see our annual report on Form 10-K for the year ended December 31, 2023 and subsequent quarterly reports and other filings filed with the Securities and Exchange Commission from time to time. All information provided in this release is as of the date of this press release and any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of this date. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.

About Uber

Uber’s mission is to create opportunity through movement. We started in 2010 to solve a simple problem: how do you get access to a ride at the touch of a button? More than 55 billion trips later, we’re building products to get people closer to where they want to be. By changing how people, food, and things move through cities, Uber is a platform that opens up the world to new possibilities.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250106678248/en/

Investors and analysts: investor@uber.com

Media: press@uber.com

Source: Uber Technologies, Inc.

FAQ

What is the size of Uber's (UBER) new accelerated share repurchase program?

Uber announced a $1.5 billion accelerated share repurchase program with Bank of America, representing over 1% of its market cap.

How many shares will Uber (UBER) initially receive under the January 2025 ASR agreement?

Uber will initially receive 18,578,727 shares, representing approximately 80% of the expected total shares under the ASR agreement.

When will Uber's (UBER) 2025 accelerated share repurchase program be completed?

The ASR program is expected to be completed during the first quarter of 2025.

What is the total size of Uber's (UBER) share repurchase authorization?

The $1.5 billion ASR is part of a larger $7.0 billion share repurchase authorization previously announced by Uber.

How will the final number of shares be determined in Uber's (UBER) 2025 ASR program?

The final number will be based on the volume-weighted average price of Uber stock during the agreement term, less a discount, subject to customary adjustments.