Is UBER About to Become Uber Successful?

Wall Street Connected Profit Like The Pros Brought to you by: Dear Reader, We have some BIG UPDATES for all you Wall Street Connected subscribers. [And you need to take action now to make sure you don't miss out!]( Our newsletter got a complete makeover. We overhauled the format and layout of the newsletter, making it easier to read and simpler to follow. And gave it a nifty new title - THE SPILL [But you won't receive this newsletter unless you sign up HERE.]( Because pretty soon, Wall Street Connected will disappear FOREVER! Proprietary Data Insights Financial Pros Top App Co. Stock Searches This Month Rank Name Searches #1 Exela Technologies 849 #2 Uber Technologies 719 #3 Shopify 607 #4 Digital Turbine 589 #5 Stoneco 415 Sponsored [Man who called 2020 Crash: Huge Event in 2022]( A historic event in 2022 will cause a massive shift in the wealth divide. It could soon impact the wealth of thousands of Americans. [More here.]( Stock Analysis Could UBER Be At The Cusp of Greatness? Look up ‘disappointing investment’ in the dictionary and Uber (UBER) is sure to be on the list. For all the hype and growth, the company never turned a profit…until recently. While it wasn’t huge, Uber hit two major milestones in the past year. First, it achieved positive net income in June of 2021. Second, it generated $614 million in cash from operations in September. To be fair, June’s number was buoyed by a gain of $1.912 billion on the sale of an investment. Still, it marked a significant shift in investor sentiment. With 719 pageviews from financial pros over the last month, Uber Technologies became the second most searched software application stock behind Exela Technologies (XELA), beating out hot stocks like Shopify (SHOP) and Digital Turbine (APPS). We dug into the most recent earnings call and took a broader look at Uber’s performance over the past few years. And we uncovered something rather interesting. Uber’s Business When you step back and think about it, Uber is just a glorified taxi service. And yet, what it created was so much bigger. It wasn’t until 2019 the company went public. And after years of hype the actual performance was a bit of a letdown. In a nutshell, Uber uses a proprietary app to bring together drivers and riders for ridesharing (AKA taxis). Initially, the company met resistance from local and state governments. However, they worked through those issues in most places. Today, the company provides ridesharing, meal preparation and delivery, as well as some limited freight transportation services. THe company breaks its bookings down into three major categories: mobility (46.5% of revenues), delivery (43% of revenues), freight (10% of revenues), and other. You can see below the constant churn of acquisitions and divestitures as the company discovers its niche. Uber has its hands in a lot of pies trying everything from autonomous driving to advertising on its drivers’ vehicles. Financials Although hampered by the pandemic, Uber’s growth has been nothing short of phenomenal. The company managed to nearly quadruple its revenue in less than a decade. However, it wasn’t until recently that the company managed to eke out a profit on an adjusted EBITA basis. The good news is that management expects the company to deliver 7% margins as a percentage of gross bookings (25% of revenue) by 2024 while becoming free cash flow positive by the end of 2022. Currently, the company forecasts adjusted EBITDA of $5 billion by 2024 or around $2.69 per share. That’s a significant shift for the company who’s operated at a loss since its inception. Valuation Uber doesn’t have positive earnings, so we only have a few relevant measures. First, we have the price-to-sales ratio of 3.76x TTM and 2.46x FWD compared to the industrial sector of 1.43x and 2.61x. While it’s rich, that's not terrible considering the significant growth Uber hits each year. Outside of 2020 which saw negative growth and 2019 which only grew at 25%, Uber drove revenues higher by more than 40%. More importantly, if we take the company’s adjusted EBITDA of 25% of revenue, we’d get $3.711 billion or around $2 per share. With the stock trading at ~$33.50, that’s an adjusted EBITDA multiple of 16.75x. How close would that be to actual income and cash? Let’s take a look at the reconciliation. The big ticket items for the company are the other income and expenses associated with investments and divestments, depreciation and amortization, as well as interest expenses. Investments and divestments will wax and wane, but should ultimately slow and even out over time. Depreciation and amortization will remain as would interest expenses. Yet, it’s fair to say that the adjusted EBITDA is a reasonable approximation for future steady state earnings. Our Opinion - 7/10 We can see a clear path for the company to become profitable in a big way. However, it could take years to realize the dream. At the moment, it’s more a question of opportunity cost than anything else. Uber can and should achieve superb results in a matter of years including profitability and cash flow. But like we said, it is still several years away. That said, it’s tough to ignore shares priced below the IPO when the company is tantalizing close to an inflection point in its history. Sponsored [Something new is coming…]( It’s about to revolutionize the entire crypto market. It’s technology so advanced that it makes Bitcoin look like a horse and buggy. If this crypto millionaire is right, it would be the greatest wealth generator of our lifetime. [See his interview here.]( [Make sure to sign up for The Spill to keep receiving our premier investment newsletter.]( # [submit to reddit]( [submit to reddit]( [submit to reddit]( To ensure delivery of all emails, [whitelist us](. Update your email preferences or unsubscribe [here](. View our privacy policy [here](#). Copyright ©2022 InvestingChannel. All rights reserved. 1325 Avenue of the Americas, Floor 27 & 28 New York, New York 10019 Disclaimer: This is not investment advice. This InvestingChannel, Inc. newsletter is for information purposes only and opinion-based. Futures, forex, stock, and options trading are not appropriate for all investors. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can ensure returns or against losses. No representation or implication is being made that using any of these methodologies or systems will generate returns or ensure against losses. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions. [Link](