“Uber announces a $7 billion stock buyback, a substantial gift to its shareholders”

EWas it a Valentine’s Day effect? As a message of love to its shareholders, perhaps. Very satisfied to see its losses seriously reduced in 2023 and in the expectation, finally, of making a profit in 2024, the taxi platform Lyft indicated, Tuesday February 13, that its margin would increase by 500 points base, or five percentage points, this year. Immediately, the very shaky stock price exploded by more than 60%. But love messages, even on Valentine’s Day, are just fleeting promises. An hour later, the company’s financial director sheepishly admitted a typo. There was one zero too many.

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The showered shareholders had not chosen the right horse. If they had bet on its competitor Uber, they would have obtained a more substantial gift. A week after announcing the first annual profit in its history, 1.9 billion dollars (1.8 billion euros) in net income, the company announced that it would buy seven billion dollars worth of its shares in Sotck exchange.

Buybacks of this type, which amount to giving money to shareholders, are obviously common, but still rare for growing companies, especially in technology. In general, they prefer to invest their cash in conquering markets. This is why Amazon has not paid its shareholders for decades. For the VTC world champion, the gift arrived straight away.

Failing to spoil the delivery men and drivers

Why such haste, when Uber boss Dara Khosrowshahi is promising at the same time to focus on the company’s growth in its transport and delivery businesses? Doesn’t he have anything better to do with this hard-earned money? Since its founding in 2009, the company has lost more than $30 billion. But it is precisely to thank its shareholders who are so patient and generous that it has chosen to reward them in this way, ensuring that it has the means for its growth and profitability.

This is not the only reason. It is also a question of offsetting the burden which will weigh on its accounts when the staff exercise their options granted at the IPO, to the detriment of the share holders. It’s worth ten billion dollars. Failing to spoil the delivery men and drivers who are currently demonstrating from London to New York, rewarding shareholders and employees has become a priority.

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