Episode summary
Uber Stock: Just Keeps Getting Cheaper
The Intrinsic Value Podcast
· · 1 hr 4 min · Hosts: Shawn O'Malley, Daniel Mahncke
Summary
Uber’s stock has barely moved over the past 15 months even as free cash flow has tripled to roughly $10 billion a year, and the hosts argue the market is underestimating how much the business has improved. They emphasize that Uber is not just rides but a three-part marketplace spanning mobility, delivery, and freight, taking a cut of roughly $190 billion of gross bookings while scaling across about 70 countries. The central bull case is that operating leverage is still expanding: margins have swung from negative 43% in 2020 to positive 12% today, helped by ads, Uber One, and easing insurance costs.
A major focus is robotaxis and Waymo’s challenge to Uber. The hosts note Waymo’s $126 billion valuation, its 100 million-plus autonomous miles, and its move to end exclusive partnerships in Austin and Atlanta, but they argue that autonomous fleets still face spiky demand, long wait times, and limited near-term scale. They estimate only about 9% of Uber’s profits are genuinely exposed to taxi competition in the near to medium term.
Rather than retreating, Uber is expanding its AV strategy. The hosts highlight more than 20 AV partners, new commitments with Lucid, Nuro, Rivian, and Nvidia, and the launch of Uber Autonomous Solutions. They also frame the $14.8 billion Delivery Hero offer as a way to widen Uber’s footprint, deepen cross-selling, and add another layer of defense if autonomy pressures U.S. ride economics.
Key takeaways
- The hosts say Uber’s free cash flow has tripled to roughly $10 billion a year while the stock still trades below its level from 15 months ago.
- They argue Uber’s operating margin swing from negative 43% to positive 12% shows the business has much more operating leverage than expected.
- The hosts estimate only about 9% of Uber’s profits are directly exposed to taxi competition in the near to medium term.
- They view Uber One as a growth engine, with 50 million members driving roughly half of gross bookings and about 23% of delivery bookings.
- They see the Delivery Hero acquisition as a way to expand Uber from 34 to 58 markets and push higher-margin cross-selling.
- They argue Uber’s strategy is to be the neutral marketplace for both human drivers and AV fleets, rather than bet on one robotaxi winner.
Notable quotes
“Over the last three years, Uber tripled its free cash flow to roughly $10 billion a year”
“From 2020 through today, Uber's operating profit margins have swung from negative 43% to positive 12%”
“what gives me some peace of mind is that there's no loyalty in the right helling business at all”
“I think the reality of needing to have flexible supply where drivers can come online to work for just an hour or two doing these demand spikes hasn't changed”
How the episode opens
Over the last three years, Uber tripled its free cash flow to roughly $10 billion a year. And yet, the stock trades below where it traded when we first pitched it on this show 15 months ago. With Whimo just recently raising money at $126 billion valuation, it has effectively the same market capitalization as Uber despite having a fraction of the revenues and being unprofitable.
So the market is clearly saying it believes in the future of ABS and it doesn't necessarily see Uber as a beneficiary. So either the market is mispricing one of the best businesses we own or the robots are really coming for our largest holding. So for anybody new to Uber, how about we start with a a 60-second refresher on the company.
Uber is the world's largest ride hailing platform, but it is really three different businesses. Mobility is the rides business we all know. There's delivery and that refers to Uber Eats and actually now includes a growing list of grocery shops and retailers beyond just restaurant delivery.
And then there's a smaller freight brokerage business that connects truckers with shippers. And we're going to pay less attention to that today because it's not material to our thesis about the company, nor does it really generate much of a financial impact. And again, for anybody kind of new to Uber, this will sound strange, but the way to think about Uber is that Uber is a marketplace.
They are an intermediary connecting supply with demand, whether that be demand for rides or demand for pad tie deliveries. And so Uber owns no cars and they actually technically employ no drivers, at least in most markets. They're contractors.
And then it matches riders with drivers and eaters with couriers across roughly 70 countries and takes a cut of every single one of those transactions, which is called the take rate.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- uber margins
- advertising and uber one
- autonomous vehicles partnerships
- robotaxis exposure
- delivery hero acquisition
Companies and tickers mentioned
- UBER
- LYFT
- AMZN
- Uber
- Waymo
- Delivery Hero
- Lyft
- Amazon
Watch the episode
Watch “Uber Stock: Just Keeps Getting Cheaper” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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