Uber Technologies (UBER), mcap=$55bn, price $27.82 vs $32.00

$UBER pitch:
– Trades 30% below IPO, despite being on pace to 2.5x revenue vs 2019 and generating substantially improved profitability.
– Contrary to market skepticism, Uber’s ridesharing business is already highly profitable (+25% EBITDA margins), and generates incremental margins north of 50%.
– Delivery business, which hardly existed at the time of IPO, today accounts for 60% of bookings and has grown +90% annually since 2018.
– Consolidated margins are set to continue expanding and gradually approaching an incremental 35%.
– Multi-product capability is an underappreciated structural competitive advantage versus its single-product competitors.
– Set up to meaningfully exceed investor profit expectations post-issuance of highly conservative 2024 EBITDA guidance of $5bn.

$UBER valuation:
– Trades at 10x estimate of 2024 unlevered FCF, with conservative margin assumptions.
– By 2024 could be valued at $100/share with a 25x EBITDA multiple – a reasonable valuation for an asset-light business that would still be growing profits by 40%-50% annually.

Exp. gain: +150% to $70/share.

Full UBER write-up (free guest account required):

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