The internet has changed how people can work and earn money. And perhaps no other business exemplifies the rise of this so-called gig economy quite like Uber (UBER 0.69%) does. This tech-forward ride-hailing and delivery outfit has become a massive $138 billion business in 15 years.

But it hasn't been a smooth journey. Shares are down 20% from their all-time high (as of May 15), a milestone achieved in February this year.

Is there an opportunity here? Should investors buy this growth stock with $100 right now?

Uber's latest financial update

Despite what the dip in the share price might suggest, Uber is still facing strong momentum. During the three-month period that ended March 31, revenue soared 15% year over year. That gain was driven by 15% growth in monthly active platform consumers to 149 million, as well as gross bookings, a measure of the total dollar value of rides and orders, that were up 20%.

"Our results this quarter once again demonstrate our ability to deliver consistent, profitable growth at scale," CEO Dara Khosrowshahi said on the Q1 2024 earnings call.

These stellar financial results came after Uber revealed revenue and gross bookings jumped 17% and 19%, respectively, in 2023. This points to the continuation of robust demand. That's a very encouraging sign, given that consumers are dealing with higher interest rates and inflationary pressures, factors you'd think would lead to lower spending on rides and food delivery.

For the current quarter, executives believe gross bookings will come in between $38.8 billion and $40.3 billion, translating to 18% year-over-year growth (at the midpoint). This forecast indicates that things aren't expected to slow down.

After raking in $172 million in operating income in Q1, Uber has now reported four straight quarters of positivity with this metric. Investors will want to see this bottom-line performance stay positive, while also showing an ability to expand over time. Nonetheless, it gives the bulls another reason to be optimistic, particularly since Uber was a perennial money loser throughout its history that's now turning the corner financially.

Positive traits

In addition to strong growth, investors have other reasons to like the stock. These relate more to the big picture as it concerns Uber's long-term prospects.

For one, this business has a dominant market position. In the U.S., Uber has a whopping 76% share of ride-hailing spending. When it comes to delivery, Uber commands 23% of the market, good for second place, but well behind leader DoorDash.

However, Uber's recently announced partnership with Instacart, as well as news that the company is acquiring Taiwan-based Foodpanda, clearly shows that management wants to further penetrate the delivery market, both domestically and abroad.

Uber's scale has given it what I believe are its two most important competitive advantages. The brand is so well-known these days that the company's name is used interchangeably as a verb. This demonstrates top consumer mindshare.

The business also possesses powerful network effects. As more riders, drivers, and restaurants join the platform, Uber's services immediately become more valuable to all stakeholders. This points to just how difficult it would be for a start-up, no matter how well-funded it may be, to create a competing marketplace from scratch. It would be almost impossible to attract drivers without any riders, for example, and vice versa.

As Uber continues to scale up with more users, gross bookings, and revenue, its business model should allow it to generate rapidly rising profits. According to Wall Street consensus analyst estimates, diluted earnings per share are projected to increase at a compound annual rate of 50% over the next three years, a significantly faster pace than the top line.

Therefore, investors shouldn't hesitate to buy the stock while it's down 20%.