UBERS AV THREAT IS BEING OVERSTATED BY MARKETS - A significant undervaluation which will be corrected sooner or later!

I have noticed when Tesla’s cyber cab venture has positive news Uber shares tend to fall. However, I am a firm believer Ubers scale, cross platform integrations, speed to market and hybrid supply approach will be most effective at leading this market in the long run, just as well as they do now.

A partially fixed robotaxi fleet cannot switch supply on and off as quickly and efficiently as a hybrid approach with humans can. This will be a huge advantage for Uber. Reason being due to the high volatility in rider demand in real time, day to day, week to week on a global scale, influenced by things such as one off Events, Shows, Rush Hour, Weekends, Night life, Tourism, Sporting Events, and much more. On the flip side you have the complete opposite where demand is extremely low such as during working hours, weather, quiet Weekends or just in general when there’s little going on within the areas they all operate in. In many cases this sort of thing is hard to predict well in advance.

The key is to match this volatility in demand in real time, with your supply of drivers, in the most efficient manner possible throughout the highs and the lows. This ensures you keep costs low when demand is low (asset light benefits) while capturing all the gains/revenue when demand is high. This is where Ubers characteristics listed above, give them a significant advantage which Tesla and Waymo will struggle to match. This will get realised by markets eventually as they see Ubers gross bookings remain strong, margins remain strong, while bottom line starts accelerating faster than top line as they continue to scale further past their fixed expenditures, leading to a re rating of the stock.

While Uber continue to expand into more rural/foreign areas increasing scale and market leadership, Waymo and Tesla will slowly but surely get approval from governments to be accepted in urban hotspots Uber already dominate ? How are they going to match the speed to market on a global scale with all those regulations/Testing thats required in each area!!

In addition to this, only a few AV providers will be able to afford their own robotaxi service. (look how much cash Waymo have burned and continue to burn while still being no where near a genuine competitor when you compare the scales of operations) Therefore, almost all Av providers will need Ubers platform to efficiently commercialise their fleet, in order to achieve a return on investment. This part seems pretty obvious to me, therefore even if robotaxi’s replaced human drivers entirely, I still believe Uber thrives in this world due to offering a wide variety of AV’s rather than just the one that Waymo or Tesla would offer which is their own. Someone may argue that Tesla’s and Waymo’s robotaxi’s are significantly better than the others. Short term perhaps it’s true compared to the majority of competitors in the field, but long term with Nvidias platform they all use, the barriers to compete at the highest level for these other providers has been significantly lowered, especially if u exclude the need to provide the ride hailing aspect.

My bold prediction is that Uber will become a trillion dollar company over time and eventually be as big as many of the hyperscalers. Not in 1 or 2 years but perhaps 5-10. Not purely from Ride hailing, but also their
Cross integrated business opportunity, which has started through Uber Eats, linked together perfectly through Uber 1. This is undoubtedly already driving growth for the company which is backed by the sustained acceleration in uber eats top and bottom line, significantly catching up with ride hailing, as well as the fast growing uber 1 subscriber count.
The value gained as subscriber is clear, and the numbers back it up to suggest the momentum isn’t stopping.

I see several other verticals that would complement their existing business model incredibly well, some of which they are already entering such as train/plane tickets, Hotel bookings and so on. By expanding to these additional verticals with a runway of opportunities of which to choose, they can offer discounts through uber 1 credits, if users chose them over competitors in the new markets they chose to enter, which users will be incentivised to do so as in return they will get significant discounts for Ubers other services which they know they are going to need sooner or later. This locks existing users in an expanding ecosystem, while also driving demand for new users who see the value existing users are gaining via cross platform benefits. This ultimately will lead to the typical more users, drive more suppliers, drive more users, drive more suppliers loop, across expanding verticals/markets.. making it difficult for rivals to compete with Uber in a number of Markets that they enter. They just need the time it takes to implement this, Delivery hero is a great acquisition to progress this journey!

Would love to hear people’s thoughts on this 🙂