Uber Technologies said on Wednesday it would buy back up to $7 billion worth of company shares for the first time ever following a strong recovery in ride-share and healthy demand at its food delivery business.
The company’s shares, which had more than doubled last year, rose more than 8% to $74.75 in trading before the bell.
“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.
Over the next three years the ride-hailing firm expects gross bookings growth in the mid to high teens percentage and adjusted core profit growth in the high 30s to 40%.
Free cash flow as a percentage of adjusted earnings before interest, taxes, depreciation and amortization is expected to be 90% or higher annually, the company said.
“Uber is hitting on all cylinders and has decided it’s time to return capital back to the owners. It’s a vote of confidence in demand for their services as well as operational discipline perfectly executed by CEO Dara Khosrowshahi,” Thomas Hayes, chairman of hedge fund Great Hill Capital, said.
“It will represent a reduction in share count by up to 5%, which is being welcomed with open arms by owners in premarket trading.”
Following a slump during the pandemic, the ride-share market expanded sharply as people stepped out more and employees were called back to offices.
Uber posted its first annual net profit last week since the company went public in 2019. The company had a free cash flow of $3.4 billion in 2023, up from $390 million a year earlier.
Earlier this month, Meta Platforms declared its first dividend days ahead of social network Facebook’s 20th anniversary.