Uber Takes Flight with Inclusion in S&P 500 Index

Dara Khosrowshahi, Uber CEO.
Photo by AFP Yonhap News

U.S. ride-sharing company Uber, whose stock price has more than doubled this year, will be included in the New York Stock Exchange's representative index, the S&P 500.

According to the Wall Street Journal (WSJ) and others on the 4th (local time), S&P Global recently announced in a press release that Uber is scheduled to be included in the S&P 500 starting on the 18th of this month. The S&P 500, the representative index of the New York Stock Exchange, is composed of 500 stocks selected based on company size, liquidity, and industry representation. To be included in the S&P 500, companies must meet eligibility criteria such as earnings (four consecutive quarters of profit), market capitalization (at least $14.5 billion), and having a U.S. headquarters.

Uber's market capitalization, based on the closing price on that day, was $120.652 billion (approximately 158 trillion KRW), easily surpassing the minimum requirement of $14.5 billion for inclusion in the S&P 500. Uber also recorded its first quarterly profit in its 14 years since founding in Q2 of this year. In addition to its core ride-hailing service, strong performance in its food delivery service led to revenue of $9.3 billion and net income of $221 million in Q3 of the same year. Over the most recent four quarters, Uber has posted a total net profit exceeding $1 billion. Wedbush Securities stated, "Uber continues to deliver quarterly strong results that exceed the guidance it provided."

With its inclusion in the S&P 500, Uber's stock price rally is expected to strengthen further. On the news of its inclusion, Uber's stock closed at $58.63, up 2.19% from the previous session. During the day, it surged to $60.92, setting a 52-week high. This closely approached the all-time high of $60.63 recorded in February 2021 during the COVID-19 pandemic. Uber's stock price has risen 137% so far this year.

U.S. investment bank Oppenheimer raised Uber's target price from $65 to $75 on the same day. Oppenheimer said, "Uber is expected to focus on share buybacks after its inclusion in the S&P 500, which will help boost investor sentiment." However, there are also analyses that the current stock price is overvalued. Uber's 12-month forward price-to-earnings ratio (PER) stands at 54 times, more than double that of its only U.S. competitor, Lyft, which is at 25 times.

This content was produced with the assistance of AI translation services.