Uber (NYSE:UBER) recently announced its Q4 earnings. While this ride-hailing, and food and package delivery service provider delivered stellar Q4 earnings that surpassed the Street’s projection, what stood out was the strong growth in its newly announced advertising business despite the challenging macroeconomic environment.
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During the Q4 conference call, its CEO, Dara Khosrowshahi, said that its ad business surpassed $500 million in annual run rate, reflecting an 80% jump in active advertisers.
Last year, following in the footsteps of its rival Lyft (NASDAQ:LYFT), Uber unveiled its advertising division. During the Q4 call, the company highlighted that currently, 25% of the merchants on the delivery side of its business are active in buying ads. This penetration level indicates that there is substantial growth potential ahead in the advertising business.
Uber targets $1 billion in ad revenues by 2024 and remains confident of achieving it through its Delivery and Mobility business.
While Uber’s ad business is growing rapidly, a Wall Street Journal report highlighted that Lyft is also witnessing stellar growth in its ad business.
Given the low penetration and expected increase in demand, the ad business could become a significant growth driver for these companies.
What is the Future of Uber Stock?
Wall Street is bullish about Uber’s future prospects. Uber stock has received 24 Buy and one Sell recommendations for a Strong Buy consensus rating. Meanwhile, analysts’ price target of $47.71 implies 31.69% upside potential.
