Uber is quietly embarking on a strategic expansion into a multi-trillion-dollar market. Although most investors still view it as a ride-hailing company, and some may also be aware of its food delivery business, Uber Eats, such a characterization is beginning to feel incomplete. Beyond its core operations, Uber is steadily entering a much broader market, aiming to become a hub for local commerce and logistics.
While Uber’s core business still involves the mobility sector, over time, the company has layered on additional services that extend far beyond transportation. Delivery is the most typical example. This business, which initially started with restaurant takeout, has now expanded to include fresh groceries, retail, convenience store items, and other everyday goods. In a recent earnings call, management pointed out that the grocery and retail sectors alone represent a trillion-dollar opportunity, with significant room for further expansion. This shift is significant, as it changes investor perception: Uber is no longer a ride-hailing company with a delivery business attached; it is increasingly resembling a platform that connects consumers with local, on-demand goods and services.
Think of it as localized e-commerce. The appeal of this strategy lies in the fact that Uber does not need to build new businesses from scratch. It already possesses a global user base, a driver network, merchant partnerships, and a mature infrastructure for route planning and dispatch. Each new business category can be embedded into the existing system, thereby creating a powerful growth flywheel: more merchants joining enriches the selection of goods; a richer selection attracts more users; more users generate greater demand; and greater demand attracts more drivers and delivery personnel. Over time, this network becomes difficult to replicate.
Uber’s growth comes not only from cities but also from emerging markets. Another important detail from the earnings call was the regional distribution of growth. Non-dense markets are growing 1.5 to 2 times faster than major cities, yet these areas still account for a relatively small share of total trips, indicating Uber’s expansion into suburban areas and smaller markets with lower penetration rates. Simultaneously, the company continues to expand its international business, with 60% of total mobility segment gross bookings already originating from outside the United States, highlighting a global growth opportunity.
As Uber expands into the local commerce sector, it has also begun constructing new profit models atop its platform. Advertising is one such model. The company initially estimated that the penetration rate of its advertising business within the delivery segment would reach approximately 2% of gross bookings, but actual figures have already exceeded this level, leading management to see even greater potential. Since advertising monetizes existing demand, its profit margins are typically higher than those of the core logistics business. Additionally, subscription products like Uber One help increase user engagement and retention. Currently, Uber One has 46 million members, with an annual growth rate exceeding 50%, and these members contribute 50% of Uber’s gross bookings.
For investors, Uber is no longer just a transportation company. It is gradually evolving into a platform connecting consumers with a wide array of local goods and services. Importantly, Uber does not need to dominate every single niche. As long as it remains the platform where supply and demand converge, it can grow in tandem with the entire local commerce ecosystem.
Uber is also actively positioning itself in the autonomous driving sector. Ronald Josey, an analyst at Citi Research, stated that with its expanding roster of autonomous driving partners and its scale advantages, Uber is poised to become the world’s largest autonomous ride-hailing matching platform by 2029. Since reporting its earnings in early February, Uber has announced seven new or expanded autonomous driving partnerships, including a collaboration with Rivian to deploy tens of thousands of autonomous vehicles. Josey also noted that advancements in artificial intelligence technology will shorten autonomous driving deployment timelines and reduce costs; specifically, Uber’s partnership with Nvidia should facilitate the deployment of Level 4 autonomous driving. He expects supply growth to accelerate over the next one to three years, with Uber’s mobility platform serving as a key driver of demand growth.
Uber recently also announced investments in building a network of fast-charging stations and established a partnership with EVgo. Dara Khosrowshahi, the company’s Chief Executive Officer, stated during the earnings call that he is more confident than ever that autonomous vehicles will unlock a multi-trillion-dollar opportunity for Uber. Josey believes that, given its scale advantages, Uber is one of the companies most likely to benefit. Therefore, in light of the stock’s decline this year due to concerns over autonomous driving, he believes investors should capitalize on the current dislocation in the stock price. Josey reiterated his “Buy” rating on Uber with a $110 price target, which represents 49% upside from the closing price last Friday.
