UBER
📈 Uber dominates the ride-hailing market, leveraging the powerful network effect for sustained growth.
🚗 Strategic acquisitions and partnerships, including a deal with Waymo, enhance Uber’s competitive edge.
📊 Despite regulatory risks, Uber’s user base and service frequency continue to grow, indicating strong market demand.
💰 Bill Ackman’s substantial investment underscores confidence in Uber’s long-term potential, despite recent market fluctuations.
@Invierteygana:
“Five super investors have invested in Uber, and two have sold, but these purchases and sales are nothing compared to the 30 million shares purchased by Bill Ackman, an investment of about 2.3 billion dollars. That purchase does not yet appear publicly, since Ackman himself indicates that he bought in January. Uber Technologies is the world’s largest provider of on-demand transportation services. Its revenues are divided as follows: 57% comes from mobility. Here, Uber has a platform that connects passengers with drivers. The passenger enters the app, indicates the destination where they want to go, and the driver closest to their position approaches and takes them. They also offer shared rides, public transportation, etc. The second line of business is Delivery, where through Uber Eats, they connect consumers with local businesses, restaurants, supermarkets, etc. Here, they can also order food or other items and pick them up at the restaurant or receive them at home. The third line of business is Freight. The Uber Freight platform connects companies that want to send goods with carriers or transport companies. There, they are shown prices in advance and have the ability to book a shipment with the touch of a button. Most of its revenue comes from the United States and the United Kingdom, although it operates in more than 70 countries where it has more than 171 million users who request trips or food at least once a month. Uber’s platforms can be used both if you are going to consume the service or if you are going to provide it. Travelers and drivers use Uber; consumers, restaurants, or delivery people use Uber Eats; and companies that send merchandise and carriers use Uber Freight. Platform-based businesses like Uber’s benefit from what is probably the strongest competitive advantage: the network effect. The network effect occurs when a product becomes more valuable as more people use it. Hotels or individuals who rent their homes want to be on the platform where there are users, where there are more people looking for accommodation. And where is a person going to look for a hotel? Well, the usual thing will be to look where more hotels are offered, so on Booking. And if they were houses, the usual thing is to look on Airbnb, so a virtuous circle is created that makes buyers and sellers want to be on the largest platforms, and this makes it almost impossible for other platforms to compete. If we create a new Booking, what user is going to use it if there are no hotels on the platform? And the same goes for hotels. What hotel is going to want to be on a platform without users? The network effect is one of the strongest and most difficult competitive advantages to achieve; it is a great defensive moat. This competitive advantage is held by the market leader or leaders, which makes it very difficult for the rest of the competitors to compete, and most end up disappearing or being bought by their competition. Here we see a list of companies bought by Uber. In the case of Uber, it is the world leader in shared transportation services, with 25% of the world market share, but this share varies by country. In the United States, it is the clear dominator, which makes its network there a strong competitive advantage. On the other hand, in China, Didi was clearly the one that dominated the market. Uber’s market share was very small to compete, so Uber sold its division in China to Didi in exchange for almost 6% of Didi’s shares. Both won. Didi became bigger and got rid of a competitor. Uber left a market that did not give it profits and became the owner of the market leader. In Spain, Uber and Cabify dominate the market. In the case of the food delivery sector, DoorDash is the market leader in the United States, followed by Uber Eats. This graph shows how in sectors of platforms like this, the biggest ones eat the smallest ones, and in the end, there are one or very few companies left. The food delivery and shared transportation sectors are expected to grow at 15% annually over the next few years, as many people do not yet use the services, and there are people who only use it once a month. An increase in users and frequency of use is expected. In Uber’s 2024 results presentation, they indicate that the number of Uber users increased by 14%. These users increased the frequency of use by 3%. This caused the number of trips made to increase by 18% in 2024. Gross bookings also increased by 18% in 2024. This is what is billed in total on its platform. Of this billing, a part is kept by the drivers, delivery people, etc., and the rest is kept by Uber. What Uber keeps are its revenues, which have also grown by 18%. Uber drivers and delivery people were initially self-employed, but in some countries, they have been declared false self-employed and have had to become employees. So Uber uses both self-employed and employees. For Uber, it is better to use self-employed because they do not have a salary, which is a fixed cost, and the self-employed is more incentivized in their work since what they generate is for them. The spread of these regulations in more territories is a risk for Uber, as the company itself indicates in its annual report. Another risk that the market has seen, and for which the stock has been punished in 2024, is the threat that autonomous vehicle companies like Waymo or Tesla may pose for the future. But these companies could partner with Uber’s network and take advantage of its network effect advantage. This could greatly reduce Uber’s costs by not needing drivers. In fact, Uber has an agreement with Waymo in some cities, but in others, Waymo is not counting on Uber. On whether the stock is cheap or not, we should not trust the P/E ratio that websites or Google itself indicates. A P/E ratio of 17 appears. The following in its income statement, we see that the operating profit was 2.8 billion. Its investments in other companies have contributed 1.8 billion. Right now, Uber has 8.5 billion dollars invested in companies like Didi, Grab, or Delivery Hero. We also see a positive tax imputation of 5.7 billion, but this is something extraordinary. With the usual taxes and making other adjustments, the normalized profit would be about 2.6 billion instead of the 9.8 billion they declare. Taking 9.8 billion, a P/E ratio of 17 comes out, but taking the 2.6 billion, a P/E ratio of 64 comes out, which may seem that the stock is expensive, but it is a company in a market with high growth, with a network effect, and it will expand margin as its fixed costs are diluted. That P/E ratio of 64 can go down quickly over the years. In the stock market, the stock fell with the results but rose strongly after the news of Ackman’s purchase, but Ackman’s purchase does not mean that the company is worth more, so a correction would not be strange after this strong rise in just a few days.”
@Invierteygana. Viewers can see the exact part of the YouTube video where the stock is discussed below.
View the video on YouTube.
Read more articles analyzing Uber (UBER) at the provided link. UBER stock.
