Uber Set to Join S&P 500: Investors React to Positive Market Response

Uber Technologies witnessed a surge of over 2% in its share value on Monday (4/12), propelled by the recent announcement from S&P Dow Jones Indices.

The renowned ride-hailing giant is set to join the prestigious S&P 500, as confirmed by the indices provider on Friday.

While the formal inclusion is scheduled for December 18, as indicated in a press release, the anticipation of this move has already led to a positive market response.

Investors, aware that managers overseeing S&P 500-tracking index funds will soon integrate Uber into their portfolios, contributed to the upward trajectory of Uber's stock.

Notably, Uber is poised to take the place of Sealed Air Corp. in the S&P 500.

Analysts from Oppenheimer underscored their confidence in Uber's performance by reiterating an outperform rating on the stock.

They also revised the price target upward, setting it at $75 per share, up from the previous $65.

The analysts believe that Uber's inclusion in the S&P 500 is likely to enhance investor sentiment regarding returns.

In a note released on Sunday (3/12), the analysts stated, "Following the inclusion, we expect UBER to lean into growth and share buybacks, which should increase investor sentiment for growth/return in 2024."

S&P's criteria for index membership stipulate that companies must demonstrate positive earnings in the latest quarter and over the preceding four quarters.

Uber comfortably meets this requirement, reporting a net income of $221 million on $9.29 billion in revenue for the third quarter.

Over the past four quarters combined, the company has generated an impressive profit exceeding $1 billion.

With a market capitalization reaching about $118 billion, Uber comfortably exceeds S&P's threshold, which mandates companies to have an adjusted market cap of at least $14.5 billion.

As Uber gears up for its official entry into the S&P 500, market watchers and investors are keenly observing the potential impact on the company's growth trajectory and shareholder returns.

Ashley Capoot / CNBC