UBER – Market expectations are for a positive Uniform ROA inflection, but management appears concerned about the mobility segment, rates, and their business position

October 5, 2020

  • Uber Technologies, Inc. (UBER:USA) currently trades at a premium to
    UAFRS-based (Uniform) assets, with a 5.5x Uniform P/B. At these levels, the market has expectations for profitability to inflect positively, but management appears concerned about their mobility segment’s performance, different rate metrics, and business position across the U.S. market

  • Specifically, management may lack confidence in their ability to sustain adjusted EBITDA, maintain margins in the mobility segment, and secure leads in their subscription product. Moreover, they may have concerns about the sustainability of high gross bookings year-over-year, their ability to continue to grow retention rates, and the decline in acceptance rates of drivers. Furthermore, they may lack confidence in their ability to offset travel restrictions with their delivery business, maintain strong business positions in their delivery segment across the top ten U.S. markets, and optimize both batching and courier efficiency. Additionally, they may be exaggerating the bounce back of countries, expectations for business profitability in the next few years, and their Uber Eats delivery model. Finally, management may lack confidence in their ability to increase the cross-dispatch rate of Uber Rides drivers moving to Uber Eats, help taxis find new sources of demand, and provide the best customer service experience