A new law making tips tax-exempt should boost take-home pay for Uber drivers and provide a "modest tailwind" to the company's driver supply, an Uber stock analyst said Tuesday.
BofA Securities analyst Justin Post raised his price target for Uber stock to 115 from 97 in a new client note Tuesday. He reiterated a buy call.
Post cited the no-tax-on-tips provision in the "one big, beautiful bill" President Donald Trump signed into law on July 4. Workers can deduct up to $25,000 in tips annually under the new law. BofA's Post estimates that U.S. Uber drivers will take in about $5.7 billion in total tips this year.
"This translates to roughly $1 billion in tax savings for drivers, assuming a 18% average tax rate, for a 2.5% pay bump," Post wrote. "Our take: Tax benefit could provide (a) modest tailwind to supply, indirectly supporting take rates."
Take-rate refers to the amount from each ride that Uber collects as revenue.
Trump made no-tax-on-tips a key pledge within his campaign for president last year. The idea had he backing of so-called gig economy platforms such as Uber, Lyft and DoorDash as Trump's tax bill wended through Congress. Uber Chief Executive Dara Khosrowshahi tweeted support for the bill after it passed the House of Representative in late May.
Uber Stock: Up 59% This Year
On the stock market today, Uber stock is down around 1% at 95.79 in recent action. Shares have rocketed 59% so far in 2025, significantly outperforming the S&P 500.
Shares have bounced back from concerns about autonomous vehicles that sent Uber stock slumping late last year. Uber broke out above a flat base buy point at 93.60 on June 26 and has mostly hovered near that level since.
But Uber stock jumped 3.3% Monday. Analysts with Wells Fargo on Monday maintained an overweight rating for Uber stock and raised their price target to $120 from $100. Uber may have also benefited from the view that Elon Musk's plan for a new political party could hurt Tesla's ambitions in self-driving cars. Tesla's push to offer a robotaxi service is seen as a potential threat to Uber's business model. Tesla stock slid 6.7% Monday.
BofA's Post saw a couple other reasons for increased optimism for Uber stock, as he wrote Tuesday. Credit card data from Bloomberg Second Measure showed booking growth had accelerated for Uber in the second quarter, he said.
Meanwhile, the Uber-backed Moove is planning to raise $1.2 billion, according to a report by Bloomberg published last week. Moove is managing Waymo's autonomous vehicles (AVs) in Phoenix and for its forthcoming launch in Miami.
"It's unclear how Moove would deploy its financed AVs (solely on Waymo's network, or also on Uber) but news is consistent with our view that there will be multiple AV suppliers long-term," Post wrote.
