Uber Finishes Postmates Acquisition; Raising FVE to $59
We view the acquisition as a necessary strategic move that could strengthen Uber’s overall network effect moat source.
We are raising our fair value estimate of (UBER) to $59 (from $51) as the firm announced on Dec. 1 the completion of its $2.65 billion all-stock acquisition of Postmates. As mentioned in our July 7 note, we view the acquisition as a positive and necessary strategic move given that such consolidation will increase the likelihood of pricing stabilization in the online food delivery market and that it could strengthen Uber’s overall network effect moat source, thereby creating further operating leverage in the long-run. We continue to expect Uber to become GAAP-profitable in 2024.
The addition of Postmates cements Uber’s second place position in the U.S. online food delivery market, behind DoorDash (which likely will IPO before the end of the year) and above the third place Grubhub (which is being acquired by Just Eat Takeaway.com). Based on the latest numbers from Second Measure and Edison Trends, DoorDash has over 45% of the U.S. market, followed by Uber Eats and Postmates which together have over 30% and are ahead of Grubhub’s below 20% share.
Based on Uber’s guidance in its Dec. 1 8-K filing, we expect Postmates to add around $375 million to Uber’s total gross booking for the month of December. With continuing strong growth in the delivery segment and Uber’s larger platform, we expect Postmates to add more than $1.3 billion to Uber’s total net revenue in 2021 after which with continuing recovery in ride-hailing we project a 30% average annual total net revenue growth for Uber through 2024.
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Ali Mogharabi does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.