Uber: Your Driver Is Here - Initiating With A Buy

seekingalpha04-27

Uber is set to report 1Q24 earnings in early May, and I think the stock is a buy ahead of earnings.In my opinion, Uber's diversification across its mobility and delivery segments will help it expand ...

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Initiating With A Buy\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-27 18:07 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4686966-uber-your-driver-is-here-initiating-with-a-buy><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Uber is set to report 1Q24 earnings in early May, and I think the stock is a buy ahead of earnings.In my opinion, Uber's diversification across its mobility and delivery segments will help it expand ...</p>\n\n<a href=\"https://seekingalpha.com/article/4686966-uber-your-driver-is-here-initiating-with-a-buy\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4008","symbol_name":"航空公司","start_time":0,"source_url":"https://seekingalpha.com/article/4686966-uber-your-driver-is-here-initiating-with-a-buy","article_id":"2430571363","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1391517615/image_1391517615.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2430571363","pubTimestamp":1714212471,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Uber is set to report 1Q24 earnings in early May, and I think the stock is a buy ahead of earnings.In my opinion, Uber's diversification across its mobility and delivery segments will help it expand i","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4008":"航空公司","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","BK4534":"瑞士信贷持仓","LU0494093205.USD":"贝莱德ESG灵活多元资产A2 USD-H","AUR":"Aurora Innovation","BK4533":"AQR资本管理(全球第二大对冲基金)","LU0310799852.SGD":"FTIF - 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Hispanolistic Investment Thesis Uber (NYSE:UBER) is said to report 1Q24 in early May. I'm initiating Uber with a buy ahead of earnings. I give Uber a buy rating ahead of earnings. I think Uber could have more upside in FY2024. My positive outlook is based on my belief that Uber's diversification across mobility and delivery will expand its market share in both. Uber, founded in 2009 and public in May of 2019, redefined transportation with its intuitive mobile app that connects drivers with riders and offers a host of features meticulously designed to elevate convenience and safety. I expect the company to beat consensus again this quarter, especially after the buybacks announced earlier this year. Uber’s Value Proposition Uber’s main source of revenue is its ride-hailing service; mobility gross bookings would be our core metric to track that. Uber generates profits across three segments: mobility, delivery, and freight, as shown below from the 4Q23 earnings report. According to the 4Q23 earnings report, mobility gross bookings surged to $19.3B, a 29% year-over-year and 8% quarter-over-quarter increase, compared to $17.9B in 3Q23 and $16.7B in 2Q23. Mobility revenue also showed an upward trajectory, reaching $4.9B in 2Q23, $5.1B in 3Q23, and $5.5B in 4Q23. I focus on the mobility and delivery segments specifically, with more emphasis on the former, as it accounted for 53.2% of Uber’s total revenue in 2023, while the latter accounted for around 32% in the same year.   4Q23 Earnings report In the face of an increasingly competitive market, I think Uber is winning the battle in the U.S. rideshare sales market. According to a Bloomberg analysis of March 2024, Uber sales increased 10% year-over-year, exponentially higher than rival Lyft’s (LYFT) observed sales, which were only up 3% year-over-year. After the pandemic, ride-hailing companies needed to recover as the pandemic brought a drought to the mobility segment. Uber exceeded its pre-pandemic levels through 2022 up until the 1QCY24, but Lyft has yet to do that. As of last month, Uber had over 76% of the U.S. rideshare industry, while its biggest competition, Lyft, came at 24% only, as shown below.   Bloomberg Second Measure In my opinion, Uber’s introduction of initiatives to monetize its mobility service will boost mobility gross bookings in 2024 and provide it with an edge over the competition. These include Uber Rent, launched in 7 different countries, and Uber Valet, available in 9 U.S. markets. Additionally, Uber launched Uber Connect, which allows mobility and delivery customers in over 4,950 US cities to have their own courier. In my opinion, such initiatives open the door for more investments and, eventually, more revenue growth. Arguably, Uber's biggest advantage over Lyft is its global presence, which increases my confidence in the stock. Uber operates in 45 countries, including the US and Canada, which are the only two countries in which Lyft operates. Autonomous tech for the win Uber has also been investing in autonomous technologies, which eliminate driver costs. The company has around 6.8 million drivers, which is considered to be its largest cost. Uber is prioritizing optimization going forward, and the ten autonomous partnerships it has, including one with Alphabet’s (GOOGL) Waymo autonomous vehicles, are expected to allow the company to cut back on some of its costs. Uber owns 21% of Aurora (AUR) and a 4% stake in Joby Aviation (JOBY), both of which are working on developing autonomous vehicles. It also signed a ten-year-long deal in 2022 with the leader in autonomous vehicles, Motional. Why I also care about delivery Beyond Uber’s ridesharing core business, diversification of revenue streams will support resilience in a challenging macroeconomic environment. In my opinion, this diversification strategy has allowed Uber to bounce back after the pandemic with the support of Uber Eats, which boomed in bookings by 54% year-over-year in 2020 and a 30% increase in customer signups during the time when people in the U.S. and globally were quarantined, with minimal need for mobility and maximal need for deliveries. Uber’s diversification across mobility and delivery helps mitigate risks and makes it more resilient to macroeconomic headwinds. The following graph shows Uber’s resiliency element in the face of adversity; the company made the best post-pandemic recovery relative to the peer group.   YCharts Uber isn’t immune to global challenges, but its diversification has supported recovery and will again in the chance the macro backdrop worsens, in my opinion. Through Uber Eats, a food delivery provider, Uber charges restaurants 30% on each order’s total value. In 4Q23, gross bookings reached a total of $17B, indicating a 19% increase year-over-year and 6% quarter-over-quarter. Revenue grew 6% year-over-year, reaching $3.1B in 4Q23 versus $2.9B. Uber Eats is most popular internationally, with 88 million active users. The service also has a huge reach, partnering with over 800,000 restaurants, and is available in 11,000 cities in 45 countries worldwide. DoorDash (DASH) has the largest market share in the U.S. at 67%, while Uber comes second at 23%. I know how this looks, but there’s no comparison between the two when looking at the bigger picture. Uber isn’t a one-trick pony, and it's a significantly larger company than DoorDash, which operates in only 30 countries. The bigger the company, the harder it is to observe growth; Uber had a 17% revenue growth year-over-year in 2023, lower than DoorDash, which came at 31%. But looking at revenue, Uber generated $37.2B in 2023, compared to only $8.6B in the same year. Last year, Uber’s revenue was mostly attributed to its mobility service, but its delivery segment brought in $12.2B, significantly higher than DoorDash’s revenue. Uber Freight is the third segment of Uber’s offerings. It was first introduced in 2017 to facilitate shipping services by acting as an intermediary between truck drivers and shippers. Freight yielded revenue of $1.3B in 4Q23, as well as 3Q23 and 2Q23. Stagnation in revenue is due to the challenges that come with a freight market cycle, which led to lower revenue per load and volume, according to the 4Q23 earnings report. This segment isn’t one I care about much since it only accounts for a small percentage of the revenue. The following graph shows Uber’s revenue from 2017-2023, broken down by each segment.   Statista Attractive Valuation Uber's valuation presents another plus for the stock. According to data from Refinitiv shown in the table below, Uber's price/earnings ratio is 52.0, slightly above the peer group average. The stock's EV/Sales ratio, however, is in line with the peer group average, at 3.5, compared to DoorDash's at 4.7. I would suggest long-term investors who want to add growth to their portfolios look at Uber. What could go wrong? One of my primary concerns for Uber is the regulatory framework. In the past, Uber has been criticized for its safety practices and commitment to regulations. According to 4Q23, Uber introduced a new initiative, “Earner and rider safety,” which aims to expand safety features such as the Record My Ride feature in several US cities. I think Uber has introduced some efforts to ease driver concerns, but I think we still haven't seen this issue resolved, which poses a potential risk down the road. I think, despite this, Uber continues to suggest an attractive risk-reward scenario. As for the reports of sexual assault accidents and discrimination, Uber hasn’t been taking it lightly. The company also implemented background checks and safety measures to eliminate the said risks. In my opinion, this won’t hinder top-line growth, especially given management’s efforts to monetize several of its services and their immediate response to challenges. What’s Next? I think you should buy the pullback over the past month. Uber’s up 23.3% YTD, but over the past month, it's underperforming the peer group. I’m not too worried; I think there’s more upside to consensus. Management is guiding for gross bookings of $ 37B-$38.5B for next quarter, which is 1Q24, versus Street estimates of $37.43B. The graph below shows Uber’s stock in comparison to the S&P500, Lyft, and DoorDash at the one-month mark.   YCharts  In my opinion, Uber will beat the top and bottom lines next quarter, but I think there is a chance that guidance for Q2 may not be as high as Street expectations, given the broader market reset of high Street expectations that we've seen play out so far this quarter. I will continue to recommend investors monitor the peer group to gauge end demand and watch mobility gross bookings for Uber.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2430571363"}