Uber Stock Drops 6.4% This Week After Earnings Miss and Robotaxi Expansion

Core Viewpoint - Uber's stock has dropped 6.4% this week following an earnings miss and legal challenges, raising concerns about its profitability and future growth prospects [1]. Earnings Performance - Uber reported Q4 2025 earnings with an adjusted EPS of $0.71, missing the consensus estimate of $0.7788, breaking a seven-quarter streak of earnings beats [1]. - Revenue for the quarter was $14.37 billion, showing a 20% year-over-year growth, but still fell short of expectations [1]. - Analysts have lowered their price targets for Uber, with Arete Research reducing it from $125 to $120, and Citigroup also trimming its target, leading to a new consensus of $105.26, indicating a potential 50% upside from current levels [1]. - Expectations for Uber's adjusted EPS in 2026 have dropped from $4.15 to $3.30, significantly impacting investor sentiment and stock performance [1]. Legal Challenges - A federal jury in Arizona ordered Uber to pay $8.5 million to a woman who was sexually assaulted by a driver, marking the first bellwether trial in a series of pending driver assault cases [1]. - This legal verdict is expected to influence the outcomes of thousands of similar cases, raising concerns about liability for gig-economy platforms [1]. - Sentiment on Reddit turned bearish following the verdict, with significant engagement on posts discussing Uber's liability in the case [1]. Autonomous Vehicle Strategy - Despite recent challenges, Uber has advanced its autonomous vehicle strategy by launching a robotaxi service in downtown Abu Dhabi, covering approximately 70% of the city [1]. - The fleet of robotaxis has quadrupled since December 2024, with plans to deploy at least 1,200 robotaxis across Abu Dhabi, Dubai, and Riyadh by 2027 [1]. - CEO Dara Khosrowshahi emphasized the importance of this strategy for Uber's future, highlighting the potential for improved margins by reducing driver costs, although it requires significant upfront investment [1]. - The stock currently trades at 15 times trailing earnings, reflecting the tension between current profitability and future growth potential [1].