I own about 100 shares at a cost basis of $71. I bought because it seems undervalued (from a pure valuation standpoint it almost certainly is at a fwd PE of \~15.5, the EPS growth and over $10B in FCF, major increase in gross bookings etc).
I bought because I thought the bull thesis was totally plausible: that mass adoption of AV doesn’t have to be a zero sum game, that Uber can be the global demand aggregator, benefiting from various partnerships, and has the flywheel model thru Uber One that will draw in recurring customers who spend more and more money on the product. And just the benefit of being a cap-lite biz that doesn’t require the debt burden trying to build a fleet of AVs and deploy them efficiently is a huge benefit. listened to a podcast with the CEO and he seems like an effective capital allocator who is ready to do what’s needed to dominate, and I appreciate his conviction. The insider buys from him and the much less wealthy COO are just bonuses. And of course, any time Pelosi buys, that’s certainly not a bad thing (or David Tepper, for that matter).
But I have a few other stocks that I want to buy, and I have to say it’s the only stock I own that actually worries me in terms of it possibly being a completely untenable business in a few years. I don’t believe the bear case! But it’s certainly possible that AVs , and my main point is just that I’m not sure it’s worth the \~relatively\~ limited upside. Don’t get me wrong, Uber could kill, and this could just be the beginning; with a market cap of just over 100B obviously it’s not going to 20X but it could presumably 3X over the next few years.
However, is it worth waiting, and is it worth the opportunity cost of having this trade sideways for so long? And the thing is, if Uber IS cooked, it is truly cooked. Like, going to zero, cooked. And it’s kind of, to me, a more binary outcome than it seems bulls are making it out to be. Unlike other stocks I own, I see massive downside in the event that I’m wrong about this one. It’s not like AMZN where, just like any other stock, it could sort of underperform the index for a while (though I don’t think that will happen either). Like, the business could really be obsolete and practically dead and I just wonder if we are truly considering that, and how long it might take for any kind of clarity that would make the stock actually start to re-rate. I just don’t see it happening anytime soon. This isn’t about impatience. It’s about the worry of permanent loss of capital. Anyone have thoughts?
FWIW, proceeds for this sale would go towards adding to AMZN, NVDA, AVGO, TSM and META, and/or initiating a position in one of the following: AZO, SPGI, MA, VST.
UPDATE: After reading all of these thoughtful comments (thank you!) and doing more research, I read that yesterday, Jim Cramer said the following on Mad Money: “I'm worried about Uber. There, I said it. I am. Why? Because it doesn't have earnings momentum. Doesn't have growth.”
I will now sell out of all other holdings and full port Uber.