Should you buy Uber stock? 2-minute analysis
- 7 months ago
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Uber reported strong results last week and said that passenger numbers had climbed above pre-pandemic levels. Meanwhile, Lyft spoke of economic headwinds and revealed their passenger numbers were still below pre-pandemic levels.
That explains why Lyft stock is down -75% year to date while Uber is only down -35%.
And at a share price of $27 dollars Uber now has a market cap of 53 billion. With 4.9 billion of cash and 10 billion of debt the enterprise value is roughly 58 billion.
In context, the company made 29 billion dollars in revenue over the last 12 months. But it’s still not profitable, losing -8.8 billion over the last 12 months.
However, that loss includes 1.6 billion dollars of stock based compensation and 6.3 billion of losses from Uber’s equity investments. These include its investments in Grab and Chinese ride sharing app Didi Global.
Account for those items and the company made an adjusted ebitda profit of 1.1 billion over the last 12 months and it’s been free cash flow positive for the last 2 quarters.
That means the company is now valued at 2 times revenue or 52 times adjusted ebitda.
That’s expensive but Uber is still growing, revenue was up 72%, and the company has done well to expand its business through Uber Eats, Freight and advertising.
It costs almost nothing to add drivers to Uber’s fleet and every trip adds incremental revenue for Uber at little cost.
Although Uber isn’t immune to a weakening economy, mass layoffs do expand the pool of potential drivers.
Crucially, Uber is making real progress to profitability and taking market share from rivals.
Management thinks it can hit 5 billion in ebitda by 2024. An 18 times multiple on that figure gets the enterprise value to 90 billion dollars. That’s about 55% upside in the stock.
There’s also optionality from Uber’s investments particularly in Didi Global, if or when China fully opens up.
After years of losses it's easy to be pessimistic about Uber stock but there’s a real chance of growth here which is why I rate the stock a cautious buy.
But these are my personal opinions, not financial advice. And I do have a long position in Uber stock.
Uber reported strong results last week and said that passenger numbers had climbed above pre-pandemic levels. Meanwhile, Lyft spoke of economic headwinds and revealed their passenger numbers were still below pre-pandemic levels.
That explains why Lyft stock is down -75% year to date while Uber is only down -35%.
And at a share price of $27 dollars Uber now has a market cap of 53 billion. With 4.9 billion of cash and 10 billion of debt the enterprise value is roughly 58 billion.
In context, the company made 29 billion dollars in revenue over the last 12 months. But it’s still not profitable, losing -8.8 billion over the last 12 months.
However, that loss includes 1.6 billion dollars of stock based compensation and 6.3 billion of losses from Uber’s equity investments. These include its investments in Grab and Chinese ride sharing app Didi Global.
Account for those items and the company made an adjusted ebitda profit of 1.1 billion over the last 12 months and it’s been free cash flow positive for the last 2 quarters.
That means the company is now valued at 2 times revenue or 52 times adjusted ebitda.
That’s expensive but Uber is still growing, revenue was up 72%, and the company has done well to expand its business through Uber Eats, Freight and advertising.
It costs almost nothing to add drivers to Uber’s fleet and every trip adds incremental revenue for Uber at little cost.
Although Uber isn’t immune to a weakening economy, mass layoffs do expand the pool of potential drivers.
Crucially, Uber is making real progress to profitability and taking market share from rivals.
Management thinks it can hit 5 billion in ebitda by 2024. An 18 times multiple on that figure gets the enterprise value to 90 billion dollars. That’s about 55% upside in the stock.
There’s also optionality from Uber’s investments particularly in Didi Global, if or when China fully opens up.
After years of losses it's easy to be pessimistic about Uber stock but there’s a real chance of growth here which is why I rate the stock a cautious buy.
But these are my personal opinions, not financial advice. And I do have a long position in Uber stock.