$UBER is currently pretty beaten down due to AV (Autonomous Vehicle) fears.
It’s currently trading at a Forward P/E of x25. The market is pricing $UBER in a way that deems AVs as its competition rather than synergy. I believe these fears are overblown and this play will end up being similar to Google around mid last year, where Google stock price was suppressed by both the Antitrust Monopoly lawsuit against them and more importantly, fears of search AI taking over Google search.
In a similar fashion, I believe AV is not here as Uber’s competition, rather Uber has the user base and market penetration to leverage themselves as a distributor for AV’s whilst keeping their asset light business structure intact.
Currently the main AV player to look out for is Waymo, and perhaps Tesla if Elon gets his act together. Waymo currently operates in 5 cities in the US, with 1 city partnering with Lyft, 2 with Uber, and the remaining 2 with themselves, constituting a testing phase to see what works in terms of distribution, market penetration and how to optimally roll AVs out.
If you can see Uber as collaborating with AV in the future and being the primary distribution platform rather than competing against it, the upside story looks quite convincing. This story is further compounded if you believe that AVs will not end up being a winner take all market, rather a fragmented market where Uber will remain as a major player.
But with the TAM for AVs being so large, and the payback period for AVs being so high currently, it’ll take ages for it to become a winner takes all market if it even does. I think the market is being way too scared of Uber right now and eventually the narrative will shift when we realise mass AV adoption will still take a couple of years to implement, hopefully leading to a multiples expansion to 30-35P/E as a reasonable tech growth stock in the current markets.
Obviously the risk in this thesis is that the AV story plays out, and Uber is left in the dust with no partners and as the traditional fleet of drivers ages out, so will their gross bookings. However, I’m not particularly worried. They’ve partnered with Nvidia, they’ve partnered with Avride, Costco, hell even Sephora. Feels like something will stick.
TLDR: AV fears are overblown and Uber will come out as a winner as a distributor rather than a direct AV competitor.
UBER fears caused by AVs is the same story as Seaech Ai fears was for Google
byu/XDPie instocks
Posted by XDPie
17 Comments
In my honest opinion, UBER doesn’t have the moat, capability, reach and resources that Alphabet has.
Nevertheless, UBER is at great value in my opinion. May be I’m wrong
people freak out over AVs like they’re killing Uber overnight, but realistically Uber’s got the user base to ride the wave, not get wiped out
It’s not the same at all
Except Uber is near ATHs and Google was flat over a 4 year period. Not saying Uber isn’t a buy, but it doesn’t feel comparable to Google.
“$UBER is currently pretty beaten down ”
It’s up about 30% in the last year and – for a growth stock that is very sensitive to the economy (any sort of downturn for people and buying taxi rides for their burrito is one of the first things that could go) – 14% off the high of last Fall isn’t really that noteworthy imo.
No, it’s the same as Library Card Catalog systems fears of Google search.
Uber to $0
Uber is dead. Long live Waymo.
Realistically we’re a loooong way away from AVs. Also there’s plenty of people who will refuse to go into an AV car because of the perception that it isn’t safe.
Again? They ran this same story when Uber was in the 60s. I still don’t see how AVs are much more profitable when the company now has to own all the cars, maintenance,and storage. Not to mention , waymos get vandalized to the point where they can’t even drive.
Uber drivers are already paid peanuts and responsible for all the costs.
Waymo operates in many cities, I think 27. Maybe some of them in test phase, but more than 5 for sure
All this negative sentiment makes me more convinced in Uber.
Uber will be dead stock in long term
What is Seaech AI hard to take this post seriously?
Agreed, especially given that:
– Monthly active platform consumers’ projections are incredible: [https://app.rast.guru/?company=Uber](https://app.rast.guru/?company=Uber)
– Even the revenue per consumer is growing (slowly, but still growing)
This proves the amazing network effect that Uber has: it doesn’t need to cut prices to grow its user base. It’s at a prime position to be an AV aggregator instead of being disrupted by AVs.
I agree. Open AV systems like the one Nvidia is developing (Alpamayo) will unlock broad scale autonomy and the utilization rate will need to be kept as high as possible to maximize yield on owning an AV. Think of it like an Airbnb. You want it booked as much as possible (whenever you’re not using it) some people will make businesses of servicing fleets and Uber will continue to be the platform where AV fleets meet drivers. Waymo may have a brief moment of glory where people download the Waymo app but long term people will be more concerned with getting from A to B instead of brand loyalty.
25x forward revenues for a cyclical company is not cheap. The next two years will determine Ubers fate as Waymo goes from 5 to 30 cities, including some overseas. They are also expanding to highway driving and airports, which is massive. 25x forward earnings leaves little upside even if their network effects win out.
Uber is a taxi service ffs. 🤦♂️ people acting like this is some kind of innovative company. All they did was beat down the people gate keeping transport services.