New technology rarely kills an incumbent overnight. It usually takes years of slow share losses before the damage shows up in the numbers.
Stock prices don’t wait that long. Investors tend to price in the worst case the moment a credible threat appears, long before customers actually switch.
That gap between fear and reality is where some of the market’s biggest mispricings live. It is also where Wall Street analysts earn their keep, by putting hard numbers on a threat everyone can see but nobody has sized.
Driverless cars are that threat for one of the world’s best-known apps, the one millions of people open to get home at night. Three of the biggest tech companies on the planet are now running robotaxi services in U.S. cities, and investors have been selling the stock of the company that built modern ride-hailing.
Now Bank of America has built a vehicle-by-vehicle forecast of the robotaxi fleets coming for Uber Technologies (UBER), and its conclusion cuts against the market’s mood.
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Robotaxi fears have hammered Uber stock
Uber stock closed at $69.89 on Sept. 22, down about 29% over the past year and nearly 12% in the past four weeks alone, according to Trading Economics.
The business itself hasn’t cracked. Uber’s gross bookings rose 24% to $58 billion in the second quarter, and trips climbed 18% to 3.9 billion, according to a statement from Uber.
More Ride-sharing:
- The Robotaxi payday Tesla promised owners isn’t coming
- Waymo is bringing driverless taxis to a fourth country
- Uber tries to leave a key market
“We’re investing from a position of strength, as we accelerate our cross-platform strategy at a global scale and build the world’s largest platform for autonomous vehicles,” Uber CEO Dara Khosrowshahi said in that statement.
Investors have focused on what’s happening outside Uber’s app. Waymo, owned by Alphabet (GOOGL), plans to launch its own app in Austin and Atlanta starting in January 2028, ending its exclusive arrangement with Uber in both cities, Automotive World reported.
Tesla (TSLA) added to the pressure when it debuted its Cybercab in Austin on Sept. 8. Uber shares fell 4% that day, even though Tesla launched with only 45 registered vehicles, TheStreet reported.
Bank of America keeps Uber Buy rating, sizes up robotaxi rivals
Bank of America analyst Justin Post and his team kept a Buy rating and $101 price objective on Uber in a Sept. 21 research note, Proactive Investors reported. That target implies about 43% upside from the $70.50 share price in the note.
“AVs (autonomous vehicles) remain a long-term competitive risk to Uber, but we believe current valuation already reflects significant disruption to incumbent US ride-hailing economics,” the analysts wrote.
To test that view, the bank built a fleet forecast for the three companies already running robotaxi services: Waymo, Tesla and Amazon’s (AMZN) Zoox.
Here’s what Bank of America expects, according to the note:
- The combined robotaxi fleet grows from about 4,500 vehicles today to roughly 118,000 in 2029
- Tesla becomes the biggest player, with about 92,000 robotaxis in 2029 in its base case
- Waymo reaches roughly 20,000 vehicles and Zoox about 6,000 by 2029
- Robotaxi bookings hit about $6 billion by 2028, or 5% of the U.S. ride-hailing market
- Uber still holds about 73% of U.S. ride-hailing bookings in 2028, down from 76% today
In my analysis, the Tesla line is the most important one in the table. Today Waymo runs about 4,000 U.S. vehicles to Tesla’s 420, the bank estimates, yet its model has Tesla’s fleet passing Waymo’s in 2028.
Why Bank of America thinks 2029 matters more than 2026
The bank’s forecast has most of the damage arriving late. Uber’s share of U.S. bookings slips to about 70% in 2029, when Tesla’s Cybercab production could hit its stride.
Uber is betting on the same year. The company has a stated goal of becoming the global leader in autonomous trips by 2029, and its partners have committed about 120,000 robotaxis to its network over multiple years, the analysts wrote.
Those partners include Nvidia (NVDA), Volkswagen, Rivian (RIVN), Zoox and Lucid (LCID), which increased its commitment to 35,000 vehicles over six years in April, according to TechCrunch.
Bank of America also ran a harsh test. If every extra dollar of robotaxi bookings in 2029 came straight out of Uber and Lyft (LYFT), Uber’s 2029 U.S. bookings would land at $96 billion, only six percent below the bank’s base forecast.
The analysts believe most robotaxi rides will be new demand. They pointed to Uber’s comments that trip growth in California, where robotaxi competition is fiercest, has been “meaningfully” outpacing the rest of the U.S.
What robotaxis could mean for your ride-hailing bill
For riders, the price war has already started. Tesla appears to be pricing its rides about 30% below Uber, Lyft and Waymo as it builds an audience, according to the note.
Cheaper rides still don’t beat owning a car for most people. U.S. ride-hailing costs roughly $3 a mile, while owning a car runs $0.66 to $1.00 a mile, according to AAA estimates cited by Bank of America.
The bank thinks the tipping point comes when robotaxi fares fall below $2 a mile. At $1.80 a mile, a rider covering 10,000 miles a year would still spend $18,000, compared with about $10,000 to own a car in a city, the analysts calculated.
That gap explains why ride-hailing covers only about 1% of U.S. miles driven today. It also explains why Bank of America sees the market as a potential $1 trillion prize if prices come down and robotaxis capture about 20% of miles driven.
Bank of America says Uber stock already prices in a robotaxi hit
The most striking math in the note is about valuation. Bank of America applied DoorDash’s (DASH) revenue multiple to Uber’s delivery, international rides and freight businesses and got an implied value of $88 a share, or $95 after adding cash and other assets.
Adding a Lyft-style multiple for U.S. ride-hailing lifted the total to about $100 a share. With the stock near $70, shares trade below the $95 the bank’s math assigns to everything except U.S. ride-hailing.
“In our view, the Street is already discounting a more disruptive AV scenario than our forecasts imply,” the analysts wrote.
In my view, that is the real message for shareholders. Uber doesn’t need to win the robotaxi race outright for the stock to work, but it does need its partner fleets to show up on schedule.
The bank flagged 2027 robotaxi deployments and faster self-driving development by major automakers as the next catalysts. It also named risks, including a weaker economy, slower user growth and share losses to Waymo and Tesla that could shrink the stock’s valuation multiple.
Related: Uber tries to leave a key market