FILE PHOTO: The logo of Uber is seen at a temporary showroom at the Promenade road during the World Economic Forum (WEF) 2023, in the Alpine resort of Davos, Switzerland, January 20, 2023. REUTERS/Arnd Wiegmann/File Photo
(Reuters) -Uber Technologies shot to a record high on Wednesday after announcing its first-ever buyback of $7 billion worth of company shares after a strong recovery in ride-share revenue and healthy demand in its food delivery business.
The company posted its first annual net profit last week since it went public in 2019. Uber executives said they expect to make buybacks consistent over time.
"Today's authorization of our first-ever share repurchase program is a vote of confidence in the company's strong financial momentum," Uber CFO Prashanth Mahendra-Rajah said.
Investors cheered the plans, with shares rising 12%, on the same day that thousands of drivers for Uber, rival Lyft and food delivery app DoorDash planned a one-day strike across the United States for fair pay.
The company posted free cash flow of $3.4 billion in 2023, up from $390 million a year earlier.
Following a pandemic-induced slump the ride-share market expanded sharply as people went out more and employees returned to offices. That helped Uber more than double its market value last year, and Wednesday's gains would push that valuation to more than $150 billion, if they hold.
"Uber is hitting on all cylinders and has decided it's time to return capital back to the owners," said Thomas Hayes, chairman of hedge fund Great Hill Capital.
"It's a vote of confidence in demand for their services as well as operational discipline perfectly executed by CEO Dara Khosrowshahi."
Over the next three years Uber expects gross bookings growth in the mid- to high-teens percentage and adjusted core profit growth in the high 30s to 40%.
"Dividends may follow down the line, but for now the commencement of buybacks indicates that Uber is no longer yet another tech-enabled startup burning through cash with not a lot to show for it," Dan Coatsworth, an investment analyst at AJ Bell, said.
(Reporting by Yuvraj Malik and Samrhitha Arunasalam in Bengaluru; Editing by Shounak Dasgupta)
