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UBER – No Traded CDS, Base Case iCDS 42bps, Negative Case iCDS 47bps, 2026 8.000% Bond YTW of 3.621%, iYTW of 1.241%, B2 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

May 21, 2021

  • Credit markets are materially overstating credit risk with a cash bond YTW of 3.621% relative to an Intrinsic YTW of 1.241% and an Intrinsic CDS of 42bps. Moody’s is also materially overstating UBER’s fundamental credit risk with its highly speculative B2 credit rating seven notches below Valens’ IG4+ (Baa1) credit rating
  • Incentives Dictate Behavior™ analysis highlights positive signals for investors. UBER’s compensation framework should drive them to focus on all three value drivers; asset efficiency, margin expansion, and revenue growth, which may lead to Uniform ROA improvement and higher cash flows available for servicing obligations. Additionally, management members have low change-in-control compensation indicating they are not incentivized to pursue a buyout, and UBER’s large market capitalization limits event risk related to a sale of the company. Moreover, management members are material owners of UBER stock relative to their annual compensation, indicating they may be well-aligned with shareholders for long-term value creation
  • Earnings Call Forensics™ analysis of the firm’s Q1 2021 earnings call (05/05) highlights that management is confident the grocery market has a potentially larger addressable market than food and that they are in position to take advantage of autonomous driving when it is safe to come to market