Daily Exasperation #1
The Uber PR machine sucks but they did turn a profit...finally. Does it matter?
“FIFTY-ONE DOLLARS AND 69 cents. That was the charge, including tip, for the 2.95-mile trip I took last May from my downtown New York City apartment to the West Side facility where Uber was holding its annual product event, called Go-Get. The ride-hailing company’s charges have been higher in recent years, and fluctuate in any case, but that was nuts.”
— “Uber’s CEO Says He’ll Always Find a Reason to Say His Company Sucks,” Steven Levy, Wired, 8/1/23 (accessed 8/2/23).
My problem with this is that the Subway would have cost Mr. Levy $2.75, but that doesn’t make for a good story. Yes, As Mr. Khosrowshahi points out there are use cases for Uber and use cases for the Subway, and yes there’s an option to search for transit inside Uber’s app, but, and be honest, once you’ve opened up Uber, it’s highly unlikely you’re searching for the best Subway option. Just read this as a PR piece and move on.
In other news, Uber finally posted a quarterly profit, and most of its relevant financial metrics (that they announced) are up year-over-year (except its freight service). Gross bookings are up, revenues are up, and adjusted EBITDA is up (look it up, nerds), but its stock price took a hit as it missed revenue projections as Lyft’s competition revs up. Just a reminder that fundamentals and business analysis is multi-faceted and often motivated by more than just performance.
Let’s also just be cognizant that the news/investing cycle is relatively endogenous these days, so it’s really hard to parse fundamentals from news sources (reporting and editorial) and vice versa. It’s a relatively safe stock to hold at this point and while transit dwindles as a mode share, the relative strength of ride-share companies in transit’s wake is worrisome, especially if we expect confirmation bias to influence funding in the future (transit is not popular so let’s not spend money to fix it).
I think it's pretty iffy that Uber's stock price will be any higher 2 years from now, and I'm not sure it's a long term hold either. I don't really see their moat as being all that great either, especially since everyone understands that it's technically possible to make a profit... but on the other hand, the reward could be pretty high if they continue to dominate and somehow figure out how to make their operation more profitable (first mover with self-driving is one potential, but unlikely avenue to exploit).