Uber announced late Friday that it would be included in the S&P 500. The ride-hailing corporation reported a successful quarter with net gains and more than $1 billion in total earnings over the past four periods. Their market cap totals approximately $118 billion, which is more than three times the median market capitalization of companies within the S&P 500, which is slightly above $31 billion.
On Friday, Uber shares rose by 5% in extended trading after it was announced that the ride-hailing company would be added to the S&P 500 Index before the market opens on Monday, Dec. 18, replacing Sealed Air Corp. This event typically results in higher share prices as fund managers have to obtain the stock in order to abide by the S&P 500 updates. Additionally, companies must meet certain profitability and valuation criteria mandated by the index.
Uber made its public debut in 2019, yet in a competitive and low-margin market, it was financially struggling as it had to maintain driver wages in order to remain competitive. Its principal profit measure was the Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA). The delivery side of Uber's business ended up achieving profitability faster than anticipated as investors during an economic downturn prefer to invest in money-making firms. The company's ad revenue also added to its profits.
Bringing about cost savings, Uber reduced its personnel by 3,500 in 2020. Its CEO, Dara Khosrowshahi, stated during an event in December 2021 that their goal is to create a company that can generate "top line rates at very, very attractive rates" and continually improve margins.
To enter the S&P 500, companies must have achieved positive earnings for the most recent quarter and the four quarters before that; in addition, a minimum adjusted market cap of $14.5 billion is a requirement. Uber's market cap totals approximately $118 billion, compared to the median market cap of S&P 500 companies which stands at over $31 billion.
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