Uber’s $20B Buyback Could Spark a Trend—2 Stocks Already on Board
Uber Technologies (NYSE: UBER), the world’s leader in ride-sharing, just announced financial results that elicited a mixed reaction from market participants. However, Uber left no room for interpretation regarding its feelings.
The company announced a new $20 billion buyback authorization, showing that it is confident in its future positioning.
This buyback program equals 10.7% of Uber’s market capitalization as of the Aug. 8 close. Let’s dive into the company’s latest results to understand why it has undertaken this massive repurchase plan.
We’ll also look at two other notable stocks that have increased the size of their buyback chests.
Free Cash Flow Turnaround Ushers in a New Era of Buybacks for Uber
In Q2, Uber’s results were solid. Revenue increased by 18% to $12.65 billion, surpassing Wall Street expectations by nearly $200 million. The company’s adjusted earnings per share (EPS) of 62 cents also beat expectations by 2 cents.
Uber forecasted strong growth in Q3 of between 17% and 21%. Still, shares rose less than 0.2% on Aug. 6 due to the print. However, MarketBeat tracked around half a dozen analysts who boosted their price target on Aug. 7. Among analysts who issued updates, their price target on Uber rose by an average of just under $4.
Although this number signals only a slightly higher confidence in Uber from analysts, the company’s $20 billion buyback plans signal that Uber's confidence in itself has increased substantially. One of the key factors in making this decision was Uber’s robust free cash flow (FCF) generation.
Uber’s last-12-month FCF hit an all-time high of $8.5 billion. Uber raked in $2.5 billion in Q2 alone, an increase of nearly 44% year-over-year. This marked the eighth time out of the last nine quarters that Uber’s FCF growth met or exceeded this level.
For most of the company’s history, its FCF has been negative. In conjunction with this, the company rarely engaged in share buybacks. However, now that the firm has grown into somewhat of a cash cow, it is able to confidently spend that money on buybacks.
In its earnings call, Uber stated, “at least half of our cash flow generation over the coming years will go to share repurchases." Thus, if Uber continues to bring in cash, investors should expect to get rewarded with buybacks.
ROKU’s Buyback Capacity Balloons on Big FCF Increase
Like Uber, entertainment stock Roku (NASDAQ: ROKU) reported Q2 results that beat estimates but led to a sell-off. Due to the firm's financials, shares fell 15% on Aug. 1. Roku also authorized a $400 million buyback program.
That equals around 3.3% of the company’s market cap as of the Aug. 8 close, a solid figure for a new buyback initiative. The company also specifically cited its FCF as a reason for this decision.
Roku’s last 12 months FCF increased by 23% compared to Q2 2024. Throughout the company’s history, it has only spent a total of around $169 million on buybacks. This illustrates how substantial the firm’s new authorization is, being equal to over twice its total buyback spending since going public.
LSEG Looks to Spend Over $1 Billion on Buybacks, and Fast
Last up is London Stock Exchange Group (LON: LSEG). This approximately $70 billion company is a massive player in capital markets, particularly in Europe. LSEG is one of the key providers of consensus earnings estimates, aggregating analyst forecasts worldwide.
Based on USD/GBP exchange rates on June 30, the company plans to spend around $1.37 billion on buybacks in the second half of 2025. This is equal to just under 2% of its market capitalization.
Although this is not a massive percentage, the company's plan to execute it in just half a year is substantial.
On LSEG’s earnings call, an analyst noted that this would be the largest buyback the company has ever executed over that time frame.
Uber Looks to Make Buybacks Its New Normal
Overall, investors should see these buyback announcements as positive signs for the three companies above. That is particularly true for Uber, which has now posted positive FCF for ten quarters in a row.
The new authorization signals that Uber believes this will continue and wants to make buybacks a staple of its capital allocation policy.
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