Riding-sharing leader Uber Technologies (NYSE:UBER) returned to profitability in the second quarter, easily beating Wall Street’s top and bottom line estimates on Tuesday. 

Even during Monday’s market meltdown and the yo-yo ride the stock market has been on afterward, Uber stock has remained strong. Shares are up 12% since Friday’s close and will likely continue heading higher, even if we’re heading for a recession.

Driving Forward to Profitability

Uber reported 17% year-over-year currency-adjusted revenue growth to $10.7 billion, easily surpassing analyst estimates for less than $10.6 billion. Profits also trounced expectations, coming in at 47 cents per share compared to the 39-cent consensus estimate.

The gains were driven by a 21% rise in gross bookings to $40 billion on a currency-adjusted basis. Its mobility bookings (the ride-sharing business) jumped 27% from the year-ago period. Similarly, delivery bookings rose 17%.

Overall, monthly active platform consumers jumped to 156 million, and drivers logged about 30 million trips per day for the service.

Particularly hopeful for Uber Technologies’ long-term growth has been its ability to leverage all of the data it collects from users of its platform and turn it into a marketing business. We hear a lot about companies wanting to horn-in on the growth of digital advertising by using their data to become an ad platform for marketers. Uber is successfully achieving it.

Marketing to a Captive Audience

On the earnings conference call with analysts, CFO Prashanth Mahendra-Rajah said advertising will exceed $1 billion on a run-rate basis while CEO Dara Khosrowshahi noted spending on grocery and retail ads had tripled on a year-on-year basis.

By introducing new ad formats and ad placements, Uber has been able to increase its monetization of the platform by increasing impressions per user session. 

Khosrowshahi said Uber is enjoying more than 2.5% click-through rates on its ads when the industry average is less than 1%. While user experience remains a priority rather than growing the advertising business, the results so far will have Uber increasing its targeted efforts.

Going Against the Grain

While the rest of the stock market is concerned the economy is slipping into a recession, Uber Technologies is not particularly worried. Khosrowshahi said that while its consumer is currently in a strong position, a recession would actually benefit the company.

The ride-sharing service is countercyclical. A recession would push more drivers to its service, which would increase the availability of cars, improve reliability and lower costs for passengers. Even with delivery, Uber benefits.

Because merchants will seek out avenues for growth, they will turn to Uber’s delivery service to reach more customers. They will also offer better product selections that are more affordable, which will resonate with customers.

Not that investors will want the economy to crash but Uber Technologies ought to hold up well during tough times. 

The Bottom Line on Uber Stock

Even with the gains Uber stock made following earnings amid the market turmoil, the stock is only up 8% year-to-date. The return to profitability for the ride-share leader is notable.

Uber made its first annual profit in 2023 then slipped into the red again in the first quarter. Bouncing back in the second indicates Uber Technologies is well on the path towards achieving consistent profitability in the future.

The stock still trades at a premium, though. It goes for 41 times earnings estimates, 3 times sales, and 29x free cash flow. To an extent, a newly profitable company will appear more rich than it will once it has a sustainable stream of earnings. Still, I would go whole-hog on buying up the stock.

Establishing a position and adding to it prudently on dips makes the most sense. Yet, after such a strong quarterly earnings result, Uber stock looks positioned for future growth. It is why I view its shares as a buy.

On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.