Uber Technologies is making waves in the market as it announces its first-ever share buyback plan. The ride-hailing and delivery company, which has faced years of cash burn, considers this a significant milestone.

As news of the buyback plan emerged, Uber's shares surged by 5.6% in premarket trading, reaching $72.68. This marks an impressive 12% gain this year, following better-than-expected earnings results.

Uber has come a long way from being shunned by investors due to its consistent lack of profitability. Over the past 12 months, the company's stock has soared by 90%. It achieved its first annual operating profit during this period and joined the prestigious S&P 500. Utilizing stock buybacks appears to be part of an ongoing effort to win over investors and mitigate the dilution caused by stock-based compensation.

In 2023, Uber's stock-based compensation expenses rose to $1.94 billion, up from $1.79 billion in the previous year. Prashanth Mahendra-Rajah, Uber's chief financial officer, stated that they would carefully manage the pace of their buyback program, starting by partially offsetting stock-based compensation and gradually reducing share count.

This move aligns with the trend observed among technology companies, which are increasingly promising capital returns amid higher interest rates. Meta Platforms, the parent company of Facebook, made a similar promise earlier this month by announcing its first-ever dividend.

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