Uber Joins S&P 500, Shares Soar 5%
The ride-hailing company Uber saw its shares rise 5% in extended trading on Friday after it was announced that it would be added to the S&P 500 Index. This news comes after the company’s recent profitability and positive earnings in the most recent quarter and over the prior four quarters in total.
The change will take place prior to the open of trading on Monday, Dec. 18, according to a press release. Companies also have to meet certain valuation and profitability requirements to be added to the S&P 500, and Uber has fulfilled these criteria.
Uber debuted on the New York Stock Exchange in 2019, but initially faced challenges as it had to compete with low-margin businesses and pay drivers enough money to stay competitive. However, the company has since made strides in improving its cost structure, reducing the cost of deliveries, and focusing on its profitable delivery business.
Uber reported net income of $221 million on $9.29 billion in revenue in the third quarter and has generated over $1 billion in profit over the past four quarters. The company’s market cap is about $118 billion, while the median market cap of companies in the S&P 500 is just over $31 billion.
CEO Dara Khosrowshahi expressed his goals for the company, stating, “Nelson [Chai, Uber’s outgoing finance chief] and my goal is to build a company that can compound top-line rates at very, very attractive rates and continue to improve margins over a period of time.”
The addition of Uber to the S&P 500 Index is expected to drive increased demand for its shares, as fund managers who track the benchmark will have to acquire the stock. This news indicates a significant milestone for the company and reflects its improved financial performance and profitability.