Uber (UBER) reported mixed fourth-quarter results as the firm missed top-line expectations but beat FactSet consensus estimates on the bottom-line. Delivery net revenue growth accelerated again while the decline in mobility revenue slowed for the second consecutive quarter. While the firm awaits a post-pandemic world which likely will return its mobility segment back to growth, that business remains profitable on an adjusted EBITDA basis. On the delivery segment side, we think Uber’s various acquisitions, which will help the firm provide on-demand delivery service for products beyond meals, are strengthening its network effect and should drive further progress toward profitability. We have slightly increased our projections and rolled our model forward, increasing our fair value estimate to $67 from $61. While the stock is trading at a discount to our fair value estimate, we recommend new investors wait for a wider margin of safety before allocating capital to this narrow-moat name.
Total gross bookings declined 5% from last year to $17.2 billion. Uber’s delivery segment gross bookings increased 130% to $10.1 billion, but this growth was more than offset by a 50% decline in mobility. While that segment did grow 8% sequentially, the second wave of coronavirus cases limited such growth. Delivery net revenue grew 224% from the prior year and mobility net revenue declined 52%. Uber’s 13% delivery take rate did not change much from the previous quarter but was significantly higher than last year’s mere 9%, which we believe is a result of operating only in markets in which Uber is a number one or number two player, which increase the chances of price stability. Mobility take rate dipped to 22% from 23% in the third quarter and 22.5% in the previous year.
| Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days. |