Uber’s Stock Is Set To Join the S&P 500

In a testament to Uber’s recent business revival, the ride-hailing and delivery company’s stock is prepped for inclusion in the esteemed S&P 500 index. This significant development follows a challenging period for Uber, which had encountered substantial obstacles during the pandemic.

The S&P Dow Jones Indices announced the impending action on Friday, stating that the San Francisco-based tech giant will join the benchmark index prior to the commencement of regular trading on Dec. 18.

Being part of the S&P 500 often fuels a surge in a stock’s appeal, given that the index is closely monitored by numerous funds constructed to replicate the S&P 500’s holdings. This role is particularly crucial as it forms the backbone of a multitude of 401(k) accounts. The end result? An increase in demand for the stocks included in the index, thereby inflating their prices.

Uber Technologies Inc. saw a nearly 4% increase in its shares on Monday afternoon, trading around $59.43. It is closing in on its record high of $63.18 per share achieved in February 2021. To date, the stock has witnessed more than a twofold increase this year alone. This impressive surge is a dramatic pivot from the summer of 2022 when the value of the stock was just $20.46. The pandemic-induced government lockdowns, which enforced a global work-from-home trend, significantly impacted Uber’s ride-hailing business as the need for its services tremendously declined.

However, Uber displayed resilience by focusing on a burgeoning food delivery division that has since evolved into a significant source of revenue. Despite the challenges, Uber’s ride-hailing service has been steadily recuperating. Currently, it’s facilitating more rides than it did pre-pandemic in 2019, fueling the company’s optimism about achieving its longstanding goal of consistent profitability.

Uber’s opportunity to meet the S&P 500’s criteria came in the third quarter, when it reported a 12-month trailing net income of $1.05 billion.

Highlighting this turnaround, analysts at Wedbush in their research note on Monday praised Uber for its multi-quarter trend of outperforming profitability predictions. This evolution signifies not just Uber’s recovery but also its proactive transformation to adapt to the changing landscape.