The time to think about buying shares is when they’re cheap. And after falling 24% in a year, Uber Technologies (NYSE:UBER) stock looks like unusually good value.

The company is entering an investment phase that’s set to alter its unit economics in the short term. But for patient investors, this could be just the time to take a look.

The numbers

Uber shares fell 8% after the firm’s Q2 earnings report on Wednesday (5 August). But it’s hard to argue with the company’s financial performance.

Across the board, numbers were moving in the right direction at a meaningful pace. More trips lead to higher revenues, which create wider margins and increased profits:

Growth rates were slightly lower than the same quarter a year ago and guidance for Q3 implies a slight slowdown in booking growth. But the results show that the business is doing well overall.

Despite this, the stock fell sharply. And that’s because the thing that’s been bothering investors about the business hasn’t gone away. 

Robotaxis

The main risk at the moment is the potential disruption coming from the rise of autonomous vehicles – robotaxis. And the company’s taking the threat very seriously.

Uber announced plans to roll out robotaxis in 15 cities by the end of the year, with 120,000 vehicles. That’s a big commitment and a major change in direction for investors. 

One of the company’s big strengths has been its asset-light model. Drivers own their own vehicles so the firm doesn’t have the associated maintenance costs. 

That has resulted in some extremely impressive cash generation. But over $10bn of investment – more than the firm’s free cash flow – changes the picture.

Sound familiar?

Investors might well think they’ve seen this kind of thing before. They absolutely have – it’s a theme that seems to be showing up in a lot of places across the stock market right now:

• The likes of Alphabet and Meta Platforms have suddenly shifted from asset-light businesses to ones that are spending heavily on AI infrastructure.
• In the UK, Rightmove has been investing in its own AI capabilities to maintain its market-leading position.

The closer comparison is probably Rightmove. Like Uber, it’s protected by a network effect that’s facing a potential threat of disintermediation. 

With Rightmove however, the early signs are encouraging. And I think there are reasons for Uber shareholders to be optimistic as well.

The case for staying calm

Autonomous trips are growing, but they’re still less than 0.5% of Uber’s 300m weekly rides. So the threat’s still relatively constrained for the time being. 

On top of this, the company isn’t going all-in on an unproven product. It’s entering an expensive part of its cycle, which can be uncomfortable, but I’m minded to take a closer look.

The stock’s trading at its lowest (positive) free cash flow multiple since going public in 2019. And the firm’s stock-based compensation has stabilised in recent years.

There’s clearly spending coming. But genuine growth prospects combined with an unusually low valuation puts the stock in really interesting territory.

Should you invest £5,000 in Uber Technologies right now?

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Stephen Wright does not own shares in any of the companies mentioned.