Uber

Oppenheimer on $UBER (-0.14%)
(Outperform; PT $85): "U.S. ride growth concerns and Robotaxi fears have created an attractive buying opportunity, with shares down 23% since earnings versus NASDAQ's +4%, despite 17%/30% revenue/EBITDA CAGR from 2024E to 2026E and the stock trading at 11.5x 2026E EBITDA.

This report highlights significant cost hurdles for Robotaxi adoption. Near term, Uber should retake lost U.S. Mobility share as it implements higher insurance costs one quarter ahead of Lyft and deploys more aggressive incentives. Longer term, Uber will benefit in a market with multiple Robotaxi providers as the leading matching/logistics platform, leveraging lower costs to serve and higher utilization rates.

Assuming Robotaxi meaningfully lowers costs for consumers—despite technological and regulatory uncertainties—Uber and Robotaxi penetration into the cost of car ownership (currently at 2%) could grow substantially. Even with a 50% reduction in take-rate (below online travel levels), this could still drive more than 2x revenue growth."

Summary of $UBER (-0.14%) Q3 2024 Earnings Call

Performance Highlights:

• Record Growth: Uber reported gross bookings up 20% year-on-year in constant currency, driven by growth in both audience and frequency.
• Profitability: Achieved an all-time high GAAP operating profit exceeding $1 billion.
• Membership & Advertising: Uber One memberships rose 70% YoY to over 25 million, while the advertising segment grew nearly 80% YoY.
• Autonomous Vehicles (AV): Continued investments in partnerships with 14 AV partners, expanding deployments with key partners like Waymo.

Risks Identified:

Rising Insurance Costs:

• U.S. commercial insurance costs remain a significant challenge, particularly in states like California and New Jersey. Although moderated compared to past years, insurance costs are expected to continue rising.
• Efforts to mitigate these include regulatory initiatives and driver safety improvements.

Market Sensitivity:

• Price elasticity in response to cost increases may slow transaction growth in certain U.S. markets.
• Weekend bookings showed slower growth compared to weekdays, indicating potential sensitivity in discretionary spending.

Autonomous Vehicle Expansion:

• Early-stage deployments in limited cities (Phoenix, Austin, Atlanta) imply heavy upfront investments with uncertain returns.
• Competitive risks from other AV players (e.g., Tesla, smaller Robotaxi companies) may impact long-term dominance.

Macroeconomic Dependence:

• Global and regional consumer demand trends heavily influence growth. While currently robust, any downturn could affect earnings.

Growth Prospects:

Geographic Expansion:

• Focus on less dense markets, including suburban and secondary cities, particularly for Delivery and Mobility services.
• International markets continue to grow faster than the U.S., reflecting strong opportunities outside core territories.

Advertising Business:

• Growing from mid-1% to a targeted 2%+ of Delivery gross bookings.
• Expanding Mobility ads with high click-through rates, new partnerships like JourneyTV, and better enterprise ad tools.

Autonomous Vehicle Strategy:

• Plans for wider AV deployment in 2025 with expanded partnerships in new cities and markets globally.
• Operational efficiency gains through centralized fleet management practices.

Membership Ecosystem:

• Uber One members spend three times more than non-members, and retention rates are higher.
• Continued investments in exclusive services, promotions, and integrations to drive higher lifetime value.

New Vertical Penetration:

• Grocery and local retail Delivery growing through partnerships with major brands and direct fulfillment.
• Expansion of Uber Direct beyond same-day delivery into broader logistics and fulfillment solutions.

Uber’s balanced approach, focusing on organic growth, strategic partnerships, and disciplined M&A, positions it for sustained growth. However, challenges like insurance costs, competitive pressures in AV, and market sensitivities require close management.

$UBER (-0.14%)
+2 in after hrs, they are speaking at conference

Sounds like Moove will be using the $UBER ERP system for Waymo fleet management in Miami when that’s rolled out.

CFO interview ongoing.

Reminder: Uber has 2 board seats & a sizable equity stake in Moove.

Sees ~20% mobility growth through most of 2025.

Sees insurance costs greatly lagging revenue growth in 2025 to "create operating leverage not seen before."

Many, many good & new nuggets coming from this interview.