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-by Robyn J Steckel
What did I know about Uber before thinking about the company?
I knew that I had a hard time getting the application (app) to work in June of 2019 at the
Nashville airport; however, I believe that it was the signal. I had used Uber a few times before, but it was minimal. I’d heard of Eats as people used it at work, but that’s the extent of my knowledge of Uber. Did I know that Uber acquired other companies? No. Did I know that they were global? No.
What does Uber stand for?
Uber’s mission statement is “We ignite opportunity by setting the world in motion.” Uber’s
Corporate responsibility encompasses Safety; Privacy; Diversity and Inclusion; Global
Citizenship and Accessibility.
Where is Uber now?
Uber CEO Dara Khosrowshahi stated in a December 4, 2019 talk “Where we are fundamentally different from almost any other company is that we operate at the intersection of the digital and physical.”
In the article Everyone Uber Thinks Is Its Competitor by Mike Murphy, Uber is in Ride-sharing
companies; Bike and scooter companies; Autonomous-vehicle researcher; Delivery companies and Freight companies. The article also points out that Uber is “contractually restricted” from competing in China until August 2023 and Russia until February 2025 due to deals they signed with affiliates they work with in those regions.
At the official Uber.com site, Uber offers: Eat; Ride; Earn; Freight; Business; Work; Bike and
Elevate. The 2019 Annual Report states “We have five operating and reportable segments:
Rides, Eats, Freight, Other Bets, and Advanced Technologies Group (“ATG”) and Other
Technology Programs. Rides, Eats, Freight and Other Bets platform offerings each address
large, fragmented markets. ATG and Other Technology Programs is focused on the
development and commercialization of autonomous vehicle and ride sharing technologies, as well as Uber Elevate.”
The 2020 Investor Presentation states that Uber has a global tech platform at massive scale
serving multiple multi-trillion dollar markets with products leveraging their core technology and infrastructure. Uber is in 69 countries and in over 900 cities.
Uber Transit launched Transit Journey Planning with real-time-data in 15 cities around the
world. Another 2019 release was where riders can purchase and redeem their train tickets on
the Uber app which started in Denver and then Las Vegas. Uber then looked at data to see
when riders were trying to schedule their ride to their train in order to make it on time. On
February 7, 2020, Uber released “Make My Train” functionality. This functionality allows riders to see their train schedule at their station and select the train that they want based on real-time data. Riders will choose how long before their train leaves in order to arrive at the station. By doing this, the Uber app calculates this time and will also order an Uber for you.
Where can Uber go and impact the world?
Well, as stated above, Uber will be able to expand into China and Russia in 2023 and 2025
respectively to begin with. Uber has other global barriers as detailed in the 2019 Annual
Report. In saying that, Uber has the potential to be the juggernaut that Amazon is today within all of their segments and any future segments.
Will Uber develop their own trains? It doesn’t seem likely due to the already well established rail systems; however, they took an already established rail system and used their app to make the rider’s experience more efficient.
When I read this tidbit I wondered if Uber will develop something similar for airports and
passenger’s flights? In the future will you be able to type in your airport, flight, the time to get through security and have the Uber app figure out when to pick you up based on weather and traffic patterns? It’s got potential.
Who thought of UberElevate? Not me but what a genius idea! UberElevate will use aerial ride sharing at scale. Uber Air is shared air transportation that’s planned for 2023. Uber Air will go between suburbs, cities and eventually within cities. UberAir will work with their Elevate Network partners to launch fleets of small, electric vertical takeoff and landing (VTOL) aircraft in Dallas, Los Angeles and Melbourne, their first international market. Again, will Uber develop the technology for a passenger to type in the airport, destination and order an Uber driver to pick you up to take you to your UberAir flight?
UberFreight is established, but what about moving into the equine, bovine or any animal
shipping business? When I showed horses there was always a demand to haul horses to
shows, breeders or new owners. While there are established equine shippers currently, can
Uber do cheaper and more efficiently with their app?
The same goes for trade shows for example. I know of companies that travel to trade shows or conventions that need to ship their table, set-up, supplies, etc. While there is UberFreight, this would be smaller than a true freight truck but more than taking it onto a flight. Can you ship it? Yes, you can. Would Uber have the technology to determine if other smaller loads were going to the same vicinity? Yes, I believe they already have the capability.
What I didn’t see is Uber tankers. Will Uber get into the tanker shipping business? I can
imagine that there are several uses for Uber tankers and by utilizing their technology could
possibly ship overseas efficiently. While I don’t know the shipping business, Uber’s technology is advanced and their research and development team is continuously improving.
What about space? Will Uber eventually venture into space and provide shipping services to
the International Space Station or other future facilities?
Uber risks?
Uber’s current segments are at high risk as there are several other opportunities for people and businesses to use other companies. Uber has to be operating their segments with more
efficiency and customer service than other companies on a global scale.
How will COVID-19 impact Uber?
According to the 2019 Annual Report, the Ride portion of the business typically has higher
revenue in the fourth quarter due to holidays and business travel. I would suspect that revenue has taken a tremendous hit on Ride; however, Eat may have made up some of that gap due to the stay at home orders, but not enough to offset UberRide lost revenue. Once the world opens fully for business, I anticipate that Uber will return to normal business as well as revenue generation.
All metrics are as of May 28, 2020 from finviz unless stated otherwise:
Market Cap: 58.25B
Income: -10,430.00M
Gross margin: 33.60%
Operating margin: -69.2M%
Earnings per Share (EPS): -7.72%
P/S - price to sales: 3.99
Sales Q/Q: 14.3%
Short Float: 1.61B
P/E Ratio: 34.15/-7.72 = -4.42 (calculated by Robyn)
PEG: -4.42/30 = -0.14 (calculated by Robyn)*
ROS: - 8433000/14590000000 = -0.00058 (calculated by Robyn)
ROA: - 33.30%
ROE: - 73.80%
Retained earnings should be positive: -16,362,000
Price target - buy, hold or sell - Upgraded to Outperform as of May 26, 2020
Does it deliver consistent growth and dividends - Rides yes, no dividends
What does the future of the company look like - Continued growth per Annual Report and the 2020 Investor Presentation
* I didn’t find any data on Uber’s expected earnings growth in order to calculate some of the
metrics so I calculated them myself. .
Summary
Uber is an amazing company with a growth horizon that is endless. The fundamentals are not impressive...yet. The vision of where Uber is currently, what Uber has recently deployed and where Uber can go is impressive.
References