Key Morningstar Metrics for Uber Technologies
- Fair Value Estimate: $90.00
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Very High
What We Thought of Uber Technologies’ Earnings
Uber Technologies’ UBER second-quarter earnings met its forecast for 18% growth in gross bookings and beat adjusted EBITDA expectations. The firm guided to further operating margin expansion next quarter, underscoring stability in high teens growth and beneficial operating leverage. Users reached an all-time high.
Why it matters: Operating performance, free cash flow, and network effects are all strong. However, autonomous vehicles are likely to dominate the Uber narrative going forward, for good or ill. We like Uber’s position in the value chain, but we also acknowledge the potential competition.
- Monthly active platform consumers, trips, trip frequency, and adjusted EBITDA margins are at all-time highs while the delivery business is reaccelerating, all of which signal robust network effects and impressive pricing power.
- We believe Uber sits in a strategically advantageous demand aggregator role relative to AV car companies. Uber can solve for nonlinear demand throughout the day by flexing human driver supply to meet peak rider demand and ensure high utilization of expensive AVs.
The bottom line: We maintain our narrow moat rating, while we increase our fair value estimate to $90 per share from $84 due to reacceleration in the food delivery segment and the increased likelihood of cross-selling and advertising revenue benefits.
- Despite Uber maintaining an enviable level of network strength, we emphasize our Very High Uncertainty Rating as the future competitive dynamics are in flux due to AVs.
- We appreciate that Uber is reemphasizing its cross-platform, “super app” strategy with delivery and mobility under one leader, with the belief it will create a more streamlined advertising and autonomous vision across segments.
