Good morning investors!

Every Thursday we release our latest “Deep Dive” — a high level, easy to follow stock analysis designed to give our Edge+ members an EDGE when it comes to properly valuing a company. We do the heavy lifting so you can make more sound investing decisions.

Today’s deep dive target is Uber — the largest ridesharing company in the world.

In today’s article we will look at the company’s performance, recent results, and dive deeper into its valuation to determine whether the stock is a BUY, SELL, or HOLD as we begin 2024, based on our opinion alone.

Before we share our research, what are your thoughts on Uber?

Alright, grab your Uber Eats and let’s dive in.

Edge Score

We have been diligently working behind the scenes to develop several stock analysis systems for our members. Recently we unveiled our first tool — The Edge Scoring System.

The system takes tons of data and provides a score for 5 different metrics:

• Valuation

• Future Growth Projections

• Past Performance

• Financial Health

• Dividend

The system then takes these five metrics and provides an overall rating for the stock, which we refer to as the Edge Score.

Here is our Edge Score for Uber:

Below, we will further break down each category and share our methodology for scoring for this company.

Company Background

Uber Technologies, Inc., commonly referred to as Uber, provides ride-hailing services, courier services, food delivery, and freight transport.  The company was founded by Oscar Salazar Gaitan, Travis Kalanick and Garrett Camp in 2009 and is headquartered in San Francisco, CA.

Uber operates in approximately 70 countries and 10,500 cities worldwide and is the largest ridesharing company in the world with over 150 million monthly active users and 6 million active drivers and couriers. It facilitates an average of 28 million trips per day and has facilitated 47 billion trips since its inception in 2010.

Dara Khosrowshahi is the current CEO of Uber.

Source of Revenue

Uber engages in the development and operation of technology applications, network, and product to power movement from point A to point B. The firm offers ride services and merchants delivery service providers for meal preparation, grocery and other delivery services. It operates through the following segments:

Mobility

• Products that connect consumers with Mobility Drivers who provide rides in a variety of vehicles, such as cars, auto rickshaws, motorbikes, minibuses, or taxis

Delivery

• Offers consumers to search for and discover local restaurants, order a meal, and either pick-up at the restaurant or have the meal delivered

• In certain markets, also includes offerings for grocery, alcohol and convenience store delivery and other goods

Freight

• Leverages proprietary technology, brand awareness, and experience revolutionizing industries to connect carriers with shippers on Uber's platform, and gives carriers upfront, transparent pricing and the ability to book a shipment. 

Past Performance

In this section we will go over the company’s recent earnings results and dive into their financial performance over the last few years.

Stock Price History

Uber shares have risen 166% since its IPO in May 2019.

Recent Earnings Report

In its recent quarterly report, Uber delivered strong Q3 numbers, surpassing revenue and earnings per share expectations due to robust growth across its business segments, though gross bookings were slightly below estimates.

The company reported a net income of $2.6 billion, or $1.20 per share, significantly up from $221 million, or $0.10 per share, in the same quarter last year. Revenue grew 21% year-over-year to $11.19 billion, exceeding the $10.99 billion analyst estimate.

Key highlights include adjusted EBITDA rising 55% YoY to $1.7 billion, outpacing analyst expectations, and impressive growth in the mobility segment with $6.4 billion in revenue, up 26% YoY. Delivery revenue climbed 18% to $3.58 billion, while freight grew modestly at 2% to $1.31 billion.

Uber also completed 2.9 billion trips in the quarter, a 17% YoY increase, with monthly active platform users growing 13% to 161 million. Gross bookings rose 16% to $40.97 billion but came in below Street expectations of $41.25 billion.

Looking ahead, Uber expects Q4 2024 gross bookings of $42.75-$44.25 billion (+18% YoY) and adjusted EBITDA between $1.78-$1.88 billion, signaling continued momentum despite macroeconomic challenges.

UBER shares are -10.2% since reporting earnings on October 31st.

Income Statement

Uber continues to see solid growth on the top line with revenues growing 20.6% year over year. There have been concerns regarding competition from the likes of Tesla and Waymo, but those still seem years away before they begin to eat into income for this ridesharing leader.

Gross bookings grew 16% year over year, and 20% on a constant currency basis. Operating income grew to $1.1 billion and adjusted EBITDA grew 55% to $1.7 billion.

All of those things are very positive signs for the company, but one of the primary reasons to be bullish on this company moving forward is due to the amount of cash they are generating. During the quarter, free cash flow came in at $2.1 billion, which is quite encouraging.

Management continues to look for ways to optimize efficiencies within the business and grow their customer base. This company is well-positioned for continued strong growth moving forward.

Thank you for joining us for this Deep Dive of Uber.

If you enjoyed this deep dive, be sure to LEAVE A COMMENT. We look forward to hearing your thoughts on Uber and our analysis. And let us know what stocks you want to see in the future.

Thank you, and until next time investors!

Mark & Chris

The Investor’s Edge

Disclosure

This deep dive is for educational and informational purposes only. The authors are NOT financial advisors, thus cannot recommend for you to personally to buy or sell any positions. Positions taken on a particular stock are opinions of the authors and only the authors. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.