Uber Stock Gains. A Big Reason Is Self-Driving Cars.

Avride’s fully electric Hyundai Ioniq 5 robo-taxis are now available on Uber in Dallas (Courtesy Uber/Business Wire)

Key Points

• Uber shares increased by 2.3% to $89.54, following an upgrade from Arete to Buy with a price target of $125.
• Arete stated that concerns regarding self-driving robo-taxis were overstated, noting their potential to expand the ride-hailing market.
• Uber launched a self-driving ride-hailing service in Dallas, partnering with Avride, covering nine square miles with future expansion plans.

Shares of the ride-hailing company Uber rose on Wednesday. Thank Wall Street and self-driving cars.

Shares climbed 3.6% to $90.68; the S&P 500 and Dow Jones Industrial Average added 0.3% and 0.9%, respectively.

First, Arete upgraded the stock to Buy from Hold and raised its price target to $125 from $82, Bloomberg reported. Barron’s hasn’t seen the upgrade report.

Of analysts covering the stock, 80% rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is roughly 55%. The average analyst price target for Uber is about $112 a share.

Arete said concerns about self-driving robo-taxis were overdone, a fear that has weighed on Uber stock—off and on—for years.

Robo-taxis, however, lower the cost of ride-hailing, potentially expanding the market for ride-hailing services. And Uber can integrate self-driving cabs into its extensive network.

Arete’s comments looked well-timed. Also on Wednesday, Uber announced a self-driving ride-hailing service for Dallas with partner Avride, which operates self-driving cars much like Alphabet -owned Waymo. Uber also uses Waymo vehicles in its network.

“The service will be available throughout nine square miles of Dallas, from Downtown to Uptown to Turtle Creek to Deep Ellum, with plans to expand the operating territory in the future,” Uber said in a statement.

Coming into Wednesday trading, Uber was up 45% over the past 12 months. Shares were $60 a year ago, when fears of autonomous vehicle disruption were higher.

Write to Al Root at allen.root@dowjones.com