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Uber: Hailing The Light At The End Of The Tunnel

Jan. 01, 2022 8:14 AM ETUber Technologies, Inc. (UBER)JOBY, LYFT49 Comments
NorEast Invest profile picture
NorEast Invest


  • Uber stock has performed very poorly since IPO, but I believe the company's luck will soon change.
  • Financially the company is performing strongly and will reach profitability targets soon.
  • Operationally Uber has performed throughout the pandemic.
  • There are limited risks to the overall success of the company.
  • Low valuation within the sector sets the stage for outsized returns in 2022.

Uber car waiting for customer

MOZCO Mateusz Szymanski/iStock Editorial via Getty Images

Background Information

Uber (NYSE:UBER) is a stock that once was at the center of investors' attention in 2019. Recently due to poor performance many analysts have moved away from the stock. Currently most of the

This article was written by

NorEast Invest profile picture
I made this page because I enjoy learning about publicly listed companies and publishing my opinion. I sincerely hope you’re able to find useful information to meet your investing goals.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of UBER either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (49)

MrPink325 profile picture
Growing fast organically, inorganically and investing in disruptive transportation companies. With an Uber fleet of Electric Automonous Vehicles around the corner...you can bet margins will go way up. The fleet Operators that have electric autonomous vehicles is the future. Waymo, Zoox and Cruise are the competition here. Add Joby and Aurora to Uber’s ecosystem and few can compete.
Gonna have competition coming out of their ears. At least a dozen gigacaps and some terracaps out there who will participate.
UBER is doomed to remain profitless and quickly disappear from the landscape.
MrPink325 profile picture
@Andre55 the real fluffy Unicorn with eternal rainbows has many suiters. 😁 it will be interesting times indeed.
dpwroc profile picture
Read and analyze. In short, beware of writings on finance, in which the companies own, the subject of discussion, is the only visual analytical information utilized and offered as direction of and basis of thought. Especially when UBER is the author and publisher, and the same article, using this in founding offers no substantive cross-analysis, in any form, descriptive or charted visually.
NorEast Invest profile picture

Source: (Uber SA EV/Sales Peer Comparison Tool)

Source: (Uber SA Return on Total Assets Peer Comparison Tool)
Blue Chip Investing profile picture
@dpwroc I am not sure if you are trying to sound smart with your condescending and convoluted review of this article. Have you ever heard the phrase, “if you can’t explain it simply, you don’t understand it well enough.” Albert Einstein
dpwroc profile picture
@Blue Chip Investing Yes, I am familiar. No, not condescending just articulating my thoughts as I see fit. Respectfully, just like like yourself, we are all just expressing our opinions, here. There is enough known about UBER already, that which keeps me from needing to explain everything I beleive to know. I have stated points of my own analysis in the past more clearly, but saying the same, over and over in response to ideas that for instance UBER is the next AMZN, has become tedious, and tiresome.
Mike Smitka profile picture
Taxi companies historically (and again in Q3) made money, despite poor management, bad treatment of drivers and customers. If you don't aim for growth, you can earn a profit.

Until I see Uber give up the growth narrative, I won't look at their stock. They did shut down their autonomous taxi R&D, but they keep spending on autonomous delivery (a speaker from that unit at an in-person conference in Detroit in November), with no evidence they are in the top 15 AV developers. Food delivery is a bottomless pit of losses, and if/when COVID eases demand will fall; restaurants will continue dropping delivery because their margins are too thin to pay Uber Eats. Their equity investments (DiDi in particular) are worthless. As long as Uber pursues their top line, their overhead will be pointlessly high.

Uber may change their strategy, quietly paring down their loss-making ventures. I don't think they can have both growth and profits.
Blue Chip Investing profile picture
@Mike Smitka are you serious? You would prefer Uber pivot their business to profits and margins vs growth and expansion? If that is what you are looking for, buy a telco, maybe T, VZ or some other trash stock that is built for retirees living on fixed income. Ubers margins are expanding at a massive rate, their moat is exploding, they own one of the largest freight companies in the us with their acquisition of transplace, they own the largest alcohol delivery service now that they bought drizzly which now is exposed to Ubers entire eco system, they are a leading player in grocery delivery in South America through cornershop and they are experimenting with ghost kitchens where Uber will roll out proprietary food delivery which will provide monster margins and through their acquisition of transplace/cornershop and drizzly, they will be able to purchase and distribute food, groceries and alcohol at wholesale prices which is not currently available with their current model. The future of Uber is a global logistics and rideshare behemoth that will be a major player competing with amazon with e commerce.
Mike Smitka profile picture
@Blue Chip Investing Growth is not a realistic option for them. They have lost out in international markets, they have no upside in the US – they are absent from anywhere but large cities – Eats has -100% margins, and the other businesses are likewise money pits. So I reiterate, they should not aim for growth, but they can shrink to profitability. The question is whether they will do so.
Blue Chip Investing profile picture
@Mike Smitka growth is not a realistic option for them? Mike I don’t mean to be rude but that is perhaps the most misinformed opinion on Uber and their business model that I have ever heard. It is patently and indisputably false. I want this statement from you to stay on seekingalpha regarding Uber because in my view, when Uber becomes the next fang and the fastest growing large cap tech company in the US, it will probably be time to keep your radical views to yourself. I don’t need even want to address every false statement you made in your previous post but I can tell you that Uber has a consensus buy a cross the board from Wall Street as is Morningstar and Morgan Stanley’s top large tech growth pick for 2022. The average target price on Uber for this year is around 70. But my apologies mike apparently you are just smarter than everyone else, including my self who has been in institutional investment consulting in a fiduciary capacity since 2010. This post is not going to age well for you.
The problem with UBER is there is no moat. There are many ways to get where you need to go. Uber is just a cheap app. has no patent so can and will be duplicated and improved. It will never make enough profit to justify a multibillion capitalization.
I see bankruptcy within 3 years.
Blue Chip Investing profile picture
@Andre55 if you are making that bet I am afraid you are the one they may go bankrupt. Uber has a huge moat and has their hands in everything rideshare has to offer. Uber fright for logistics, which is now a 4 billion revenue biz and high margin, Uber eats for food, grocery, alcohol and drug delivery, autonomous driving through aurora innovation, scooters through like, cornershop for food/grocery delivery outside of us, and didi for non us rideshare. I could go on, but Uber is the next fang
@Blue Chip Investing Totally agree. Uber and Didi have redefined the industry. Within 5 years, taxi will disappear due to its inefficiency. Didi has and will dominated China ridesharing market, and Uber will dominate the rest of the world. There may be new entrants but Uber gets first mover advantage. In terms of Uber's moat, I think it has network effect due to large market share, and also it has collected huge amount of user data which will help Uber consistently improve its services.

If that were true, the taxicabs would have figured out how to compete by now. Moats can be created via shared scale economies.
adamb23 profile picture
Here is my problem with Uber. They depend on drivers owning cars, which have become extremely expensive. Car prices have gone up astronomically past year, with no signs of going down. That hits the drivers pockets. Next is oil/gas prices, this takes another bite out of drivers pockets, leaving Uber with no option but to raise prices or lose drivers. Raising prices, will turn away passengers. I am an N=1, but where I live Uber prices doubled, I have since resorted back to asking friends for rides.

Inflation is here to stay, gas prices are here to stay, so is car prices. Uber is a short IMO.
CuckTrader profile picture
@adamb23 No they don't depend on drivers owning cars. You can rent a car straight from Uber/Lyft (a Tesla even) and use that to transport people and still turn a decent income. Prices are high because people are willing to pay for them. Basic supply and demand, high school economics really, which many fail to understand.
MrPink325 profile picture
@adamb23 Arrival is making cheap EV ride hail cars for Uber in the UK. Coming to US soon.
I disagree for one reason. Their prices have skyrocketed and people are refusing to pay the doubled prices. I was at Los Angeles Airport at 10:30PM New Years Eve. Ride on Uber to my home less than 10 miles away was $63 and more depending on option you selected. I stood in a fast moving taxi line along with at least 30 others for a taxi ride which cost $36 + tip. We gave him $50. I never planned to take a taxi again and now Uber is price gauging, so will only use when fares are reasonable
@sonjacarlin I live in LA. Everybody is talking about the increased prices but nobody has stopped using the product. The mindshare is there, people aren't going back to taxis. Long Uber
There is no light at the end of the tunnel when your drivers are slowly being reclassified as employees.
@hsheikh customer will pay for it, Uber and Lyft will just raise prices
Blue Chip Investing profile picture
Sandis, a couple things to note that you didn’t bring up in your analysis but are extremely bullish for Ubers top and bottom line. Uber completed their acquisition of one of the United States largest logistics an freight companies, transplace. Based on Glassdoor estimates transplace generates between 2-5 billion in revenue and given the supply chain crunch u would imagine that it is close to the higher end 5 billion. Contextually, Uber generated about 15 billion in revenue over the last 12 months so this acquisition alone could add 33% top line growth to Ubers business. Given the favorable margin profile of logistics businesses, this business should provide a steady stream of free cash flow and bolster margins. They also acquired the largest alcohol delivery service, drizzly and I think this could be extremely accretive to Ubers business as drizzly is now connected into Ubers wide moat eco system of customers and this should fuel unprecendred growth for this early life cycle business. The acquisition of cornershop which is one of the pioneers in grocery delivery in South America will also further widen Ubers moat and create a huge fun way for growth in that market and globally. I could easily see Ubers shares over 100 by year end 2022. It seems to me, that Uber is likely the next fang.
NorEast Invest profile picture
@Blue Chip Investing Thanks for providing me more information and due diligence. Overall great write up I was going to say you should be a writer, but it seem you already have articles on Seeking Alpha. I would like to see you author a full article on Uber. I believe it would be really informative for a lot of people.
Blue Chip Investing profile picture
@Sandis Weil yeah, if I can find some time I will definitely try to put something out. Uber is on the cusp of greatness and I am glad you are shedding light on this amazing opportunity. Keep up the good work
@Blue Chip Investing

The only issue I have with your comment is the narrow band and timeline you put on “by the end of 2022”. That’s just such short term thinking for a company that’s clearly playing the long game. If your investing in Uber right now, your investing for a 10yr hold….think buying AMZN 15yrs ago when they didn’t care about traditional analyst metrics and just kept on plowing returns back into both the business as well as the customer to build a long lived moat and virtuous circle of future returns.
Uber freight will be the biggest division of this company in 3 years
NorEast Invest profile picture
@Mlack633 That's a bold prediction but it could possibly come true. I am really enthralled with the COVID on COVID off synergy that eats and mobility have. In general freight doesn't get enough credit and could be a good size of Q1 22 and Q2 22 revenues.
I’m a believer. Q-Commerce should be a major growth driver moving forward too IMO
astute pathways profile picture
About 38 Analysts expect Uber to lose money this year...but not Lyft
IMO Uber will not survive.
gastro4 profile picture
Thanks for analysis. Staying long
Next Megacap company
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