We recently compiled a list of the 10 Best Delivery Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Uber Technologies, Inc. (NYSE:UBER) stands against the other delivery stocks.
The growth of global e-commerce is linked to a surge in demand for delivery services. According to research by environmental organization Stand.earth, global e-commerce is anticipated to grow at a rate more than twice that of in-store purchases. It is anticipated that by the end of this decade, 25,000 parcels will be shipped per second. The rise in global e-commerce has also produced a change in people’s shopping behaviors around the world. Online shopping accounts for about 15% of all American purchases, with an estimated yearly value of $1 trillion, as reported by Bloomberg.
ParcelHero projects that the global delivery and courier market will reach $648 billion by 2030, expanding at a compound annual growth rate (CAGR) of 4.31%, driven by improved logistics technologies and e-commerce. The market was valued at $482.9 billion in 2023, representing a 2.5% annual growth rate with a 5% growth from 2018 to 2023. The UK market is projected to reach $32 billion by 2030, with a compound annual growth rate (CAGR) of 6.22% from its 2023 valuation of $20.97 billion. The transportation management systems market is anticipated to surge by 19.7% from its 2023 valuation of $13.5 billion to $33.3 billion by 2028. Innovations in technology, such as tracking, automation, and AI-powered logistics, will boost productivity and accommodate growing package volumes.
Shipping and delivery times remain a key concern for customers. Recent data from Digital Commerce 360 and Bizrate Insights reveal that customers have remained committed to giving free and quick shipping top priority while placing online shopping in 2024. According to a survey of 1,013 online buyers, 81.34% of them rank free shipping as their main concern when receiving deliveries. Next in line is fast shipping, which was highlighted by 68.41% of respondents. Furthermore, 55.68% of customers stressed how important it is for merchants to maintain inventory and shipping readiness.
The demand for food delivery services has also increased dramatically as a result of the COVID-19 outbreak. Restaurants had to rely more on outside delivery services to stay afloat since dine-in options were shut down or severely restricted in many areas of the United States. Additionally, online grocery delivery and pickup services flourished as customers avoided going to stores. According to Bloomberg, online restaurant ordering accounted for about 40% of total restaurant sales in 2023, just over $22.4 billion in 2021, and has grown 300% faster than dine-in sales since 2014. CB Insights forecasts that the food delivery market size will grow to $320 billion by 2029.
In addition, drone technology is increasingly being used across the US, with leading companies providing faster delivery services, particularly for short-distance shipments. As per McKinsey, drone delivery services are expanding, with over 800,000 paid commercial deliveries globally by 2023. According to the firm’s most recent projections, the total addressable market in the United States alone is predicted to reach $5 billion by 2035, with an estimated 1.5 billion deliveries annually. Therefore, drone delivery is one of the first commercialized sectors of the larger future air mobility market, which also includes other platforms that use new aircraft, like urban and regional air mobility, as well as other commercial drone use cases, such as inspection or surveillance.
Even though drone deliveries are not yet widely available, 83% of consumers in six countries who participated in a McKinsey survey were aware of them. India leads at 92% and the U.S. comes in last at 53%, with 76% of respondents saying they would be willing to switch, reflecting a 19% growth from 2021. With 35% willing to pay up to 1.5 times more, 58% of respondents are willing to pay a premium. The most preferred use case is express shipping (56% are willing to switch), which is followed by food and medical delivery. Urban residents (80%) and frequent consumers (68% prepared to pay more for food delivery) have the highest adoption potential. Finally, operators should put speed and convenience first because 20% of customers currently pay for expedited shipment, showing that there is a high demand for faster alternatives.
A close up view of a hand holding a smartphone, using a ride sharing app.
Our Methodology
For this article, we scanned Insider Monkey’s Q4 2024 proprietary database of billionaires’ stock holdings and identified delivery stocks from the list. These companies are involved in logistics, shipping, and last-mile delivery services. From there, we picked the top 10 stocks with the highest number of billionaires having a stake in them. Where two or more stocks were tied on billionaire sentiment, we used the dollar value of billionaire holdings as a tiebreaker between them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Uber Technologies, Inc. (NYSE:UBER)
Number of Billionaires: 22
Billionaire Holdings: 1,715,739,984
During the pandemic, ride-sharing behemoth Uber Technologies, Inc. (NYSE:UBER) increased its efforts to distribute food from restaurants by acquiring Postmates, a food delivery service, to strengthen its Uber Eats offering. The shares have surged up by more than 20% YTD, making it one of the Best Delivery Stocks.
The fourth-quarter performance of the firm is strong despite challenges like currency headwinds and temporary setbacks. Uber Technologies, Inc. (NYSE:UBER)’s revenue climbed primarily as a result of robust demand in Mobility and Delivery, as well as higher trip volume. Overall gross bookings grew by 18% year over year to $44.2 billion, with delivery coming in at $20.1 billion (18% growth YoY) and mobility at $22.8 billion (18% growth YoY). The combined Mobility and Delivery revenue increased 23% year over year to $10.7 billion, driving a 20% YoY rise in revenue to $12.0 billion.
Increased order volume and strengthened merchant relationships drove the growth of the Delivery segment, which helped to drive an 18% YoY rise in gross bookings. Trips climbed 18% year over year to 3.1 billion, with an average of 33 million each day. These outcomes display the company’s consistent performance and operational resilience in the face of outside obstacles.
Uber Technologies, Inc. (NYSE:UBER) is the ideal partner for autonomous vehicle businesses seeking to build AV fleets and get high utilization rates because of its position as the leading ride-hailing and delivery demand aggregator. This allows the firm to collaborate with firms like Waymo or Tesla to smoothly set up autonomous vehicles for its massive audience at a low cost, thereby strengthening its dominance in the future of delivery.
Overall, UBER ranks 2nd on our list of theBest Delivery Stocks to Buy According to Billionaires. While we acknowledge the potential for UBER as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than UBER but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.