In May, Uber Technologies (UBER) had its IPO at a price of $45 per share. While the company is still posting steep losses, the company is still in its rapid growth phase, so investors should instead focus on its long-term growth trajectory.

With this in mind, in this article, we will perform a longer-term free cash flow analysis of the company with the aim of projecting if Uber will ever pay a dividend.

Uber: Impressive Growth Prospects

We  believe that Uber has a substantial growth runway ahead of it because it develops and supports technology applications that enable independent providers of ridesharing, meal preparation, and delivery services to transact with riders and eaters worldwide, industries which are all in their early stages of growth as the current active-platform consumers represent only 2% of the population in Uber’s markets.

Furthermore, Uber should maintain its strong market presence in each of these industries thanks to its early mover advantage as well as its strong network advantage that it has spent almost a decade building and improving. Its network is both massive in size as well as in geographic reach as it is currently present in more than 700 cities in 63 countries, giving it economies of scale and plenty of markets to continue growing in.

The current growth trend is very strong with gross bookings growing by a constant-currency 41% annual rate during its most recent earnings release. In just two years, Uber’s gross bookings have grown by a whopping 211%. Meanwhile, its monthly active platform consumers have increased by 33% over the past year, also nearly doubling over the past two years. This shows that its scale and popularity with its average consumer are both growing at healthy clips.

That being said, there remain plenty of risks for investors to consider before buying into the long run Uber growth story. For example, the monthly trips per active consumer haven’t grown nearly as rapidly as the number of consumers. Over the past two years, monthly trips per active consumer have only increased by 5.8% and have stagnated entirely over the past several quarters.

Additionally, regardless of how much revenue and user growth Uber experiences in the coming years, it has a long ways to go before becoming profitable. Every single quarter of its existence thus far, Uber has posted a loss and has seen its losses steepen in recent quarters from a $280 million adjusted EBITDA loss in Q1 2018 to an $869 million adjusted EBITDA loss in Q1 2019. These losses look poised to continue for the foreseeable future as well, as management has already implied that 2019 will see continued sizable losses and has failed to point to a potential date at which they expect to turn a profit.

While not all losses are bad given that many of them are incurred from growth spending, there are also significant costs to the business model (attracting and retaining good and prolific drivers) as well as fierce competition from rivals like Lyft (LYFT) which are placing continual pressure on profit margins.

Future dividend potential?

At a minimum, it means that shareholders should not expect a dividend anytime soon as, even when the company becomes profitable, it will likely want to establish a track record of healthy profitability and potentially deleverage before it even considers taking on the long-term commitment of paying a dividend.

Further considerations for income investors are that, even when Uber does pay a dividend, it will likely be negligible relative to the price of the stock since growth-oriented tech stocks tend to trade at high price to earnings multiples. Therefore investors should not expect any sort of meaningful dividend income from the stock until the business’ growth prospects have slowed down considerably and it maintains a healthy level of profitability.

While Uber could very well prove to be a lucrative investment for total-returns focused investors, for those looking for a stable stream of growing dividends, it is not a very good choice right now.