Key Morningstar Metrics for Uber Technologies
- Fair Value Estimate: $85.00
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Very High
What We Thought of Uber Technologies’ Earnings
Uber Technologies’ UBER fourth-quarter gross bookings grew 22% year over year, exceeding management’s guidance of 20%. The firm estimates slightly lower year-over-year growth (19% at the midpoint) for the next quarter. We suspect guidance and autonomous vehicle uncertainty are the main reasons for the stock decline.
Why it matters: Based on all quantifiable network-effect metrics, Uber’s two-sided marketplace flywheel remains intact, but persistent uncertainty about the impact of autonomous vehicles and associated headline risk creates a sizable headwind to a positive re-rating for the foreseeable future.
- Core user growth is accelerating (18% year over year, compared with a 15% trailing two-year average), food delivery growth is the highest since 2022, and engagement (trips per user) is stable. Still, durability and value-chain positioning are being questioned amid the introduction of AVs.
- The key long-term tension for Uber is whether it can remove human drivers, remain asset-light, and capture an increasing platform share (all bullish), or whether it must invest heavily in AVs or pay Waymo large spreads under partnership models. We believe the answer is somewhere in between.
The bottom line: We maintain our narrow moat rating and lower our fair value estimate to $85 per share from $93, after scaling back our mobility growth assumptions to reflect our view that AV companies—such as Waymo and Tesla—are willing to bypass potential Uber partnerships in favor of controlling the rider relationship directly.
- Based on our analysis, asset-light partnerships between AV companies, Uber, and a financing partner (that views AV ownership as a yield vehicle), have the best unit economics, but this hasn’t been playing out. Waymo appears to be dragging its feet on partnerships, and we believe this will persist indefinitely.
- Shares appear cheap, but we recommend holding off on investing until the shares trade in the $60 range.
