Uber's $20B Buyback Could Spark a Trend—2 Stocks Already on Board

Core Viewpoint - Uber Technologies announced a $20 billion buyback authorization, reflecting strong confidence in its future positioning despite mixed market reactions to its financial results [1][2]. Financial Performance - In Q2, Uber's revenue increased by 18% to $12.65 billion, exceeding Wall Street expectations by nearly $200 million [3]. - The adjusted earnings per share (EPS) for the same quarter was 62 cents, beating expectations by 2 cents [3]. - Uber forecasted strong growth for Q3, estimating an increase between 17% and 21% [4]. Free Cash Flow (FCF) Insights - Uber's last-12-month FCF reached an all-time high of $8.5 billion, with Q2 alone contributing $2.5 billion, marking a nearly 44% year-over-year increase [6]. - This growth in FCF has allowed Uber to confidently engage in share buybacks, a practice it rarely undertook in the past due to negative cash flow [7]. Buyback Strategy - The new $20 billion buyback program represents approximately 10.7% of Uber's market capitalization as of August 8 [2]. - Uber indicated that at least half of its cash flow generation in the coming years will be allocated to share repurchases, signaling a commitment to this strategy [7]. - Following the announcement, analysts adjusted their price targets for Uber, with an average increase of just under $4 [4].