Investing in high-quality growth stocks, in most cases, can be extremely beneficial if an investor is patient enough to tolerate short-term volatility. One such growth stock is Uber Technologies (UBER). Most people know Uber as just a ride-hailing service. However, the company has significantly transformed since its inception, evolving into a multifaceted tech platform spanning multiple sectors.

It has diversified into mobility, food delivery (Uber Eats), and freight (Uber Freight), and is now venturing into healthcare, autonomous vehicle research, and artificial intelligence (AI). Valued at a market cap of $126.7 billion, Uber stock is down 1% year-to-date, trailing the S&P 500 Index’s ($SPX) gain of 23.7%. Analysts, on the other hand, believe this tech stock has enormous potential and expect it to skyrocket by nearly 99% next year. Uber stock is down 30% from its 52-week high, making now a good time to buy before the year ends. 

Diversifying Was a Smart Move for Uber

While the company has expanded into many other rapidly growing initiatives, ride-hailing remains its most in-demand and profitable business. Following the global pandemic, the mobility industry has recovered, boosting Uber's financial performance. 

Uber operates in very competitive markets. In ride-hailing, it competes with Lyft (LYFT) in the United States and regional players such as Grab (GRAB) and Ola in international markets. Nonetheless, Uber remains the world's largest ride-hailing and delivery network, operating in over 70 countries. 

Similarly, Uber Eats competes with DoorDash (DASH) and Grubhub in the food delivery business. Despite the competition, Uber has maintained its leadership position in most markets due to its size, brand recognition, and technological advancement. The company's strategy of combining multiple services into a single app has also increased customer loyalty. 

In the third quarter, there were 161 million monthly active platform users. Uber's total revenue increased 20% year-over-year to $11.18 billion, boosted by a 16% increase in gross bookings to $41 billion. Total trips during the quarter totaled 2.9 billion, representing a 17% increase year-over-year. 

Mobility and delivery revenue increased by 26% and 18%, respectively, while freight revenue increased by only 2% over the prior-year quarter. 

The company reported a net profit of $2.6 billion, up from $221 million the year before. Despite continuing investments in expanding its business, the company's balance sheet remains strong, with $9.1 billion in unrestricted cash, cash equivalents, and short-term investments. It also plans to redeem $2 billion of its outstanding debt in Q4. 

The company generated $2.1 billion in free cash flow (FCF), which should help pay down debt and fund expansion projects. Uber is investing in autonomous vehicle technology through partnerships with companies such as Waymo. On Dec. 6, Uber and WeRide announced the launch of autonomous vehicles in Abu Dhabi. This is the first time autonomous vehicles have been made available on the Uber platform internationally. The company also has another multiyear strategic agreement with Avride to "integrate its delivery robots and autonomous vehicles into Uber and Uber Eats in the U.S."

Uber has also expanded its food delivery business internationally, acquiring Delivery Hero SE's foodpanda delivery business in Taiwan. Analysts who follow UBER stock expect earnings to increase by 116.7% to $1.89 per share in 2024 and by 22.4% to $2.31 per share in 2025. Uber, trading at 31 times forward 2025 earnings, appears to be a reasonable growth stock to buy right now. 

Uber has come a long way since its beginnings as a disruptive ride-hailing startup. Aside from its dominance in the ride-hailing and delivery markets, the company's aggressive expansion into rapidly growing areas such as autonomous vehicles and AI has the potential to further transform it. For those with a high risk tolerance and belief in Uber's transformative potential, the stock could provide significant returns in the coming years.

Is UBER Stock a Buy Now?

While the stock is currently volatile, Wall Street analysts have a generally positive outlook on Uber, rating it as a "Strong Buy.” Of the 45 analysts who cover UBER, 37 rate it as a "Strong Buy," three as a "Moderate Buy," and five as a "Hold." Its mean price target of $91.76 implies that the stock could rise by 50% from its current level. Its Street-high estimate of $120 suggests the stock could rally as much as 99.3% over the next 12 months.