Skip to Content
Stock Analyst Update

Uber Undervalued, on Track to Profitability

We continue to recommend investing in this 4-star narrow-moat company.

Mentioned:

While demand for Uber’s (UBER) services remains strong, the firm’s second-quarter revenue came in a bit short of consensus expectations and losses were higher than expected due to the restricted stock unit expenses related to its IPO. However, in our view, there are some indications of possibly operating leverage as growth in users and rides was not accompanied by significantly higher operations, support, and marketing costs as a percentage of net revenue. Plus, excluding a one-time IPO-related award to drivers, take rates in the firm’s core platform increased sequentially, which we think further displays ride share price stability and a stronger online food delivery market position for Uber Eats. Management now expects net revenue growth to accelerate a bit during the remainder of 2019 driven mainly by growth in gross bookings. Based on second-quarter results, we slightly adjusted our 10-year model and are maintaining the $58 per share Uber fair value estimate. After surging more than 8% during market hours, the stock is down 6% in after-hours. This name requires some patience, but we remain confident that Uber, along with its peer, Lyft, are progressing toward profitability. We continue to recommend investing in this 4-star narrow-moat name.

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.

Ali Mogharabi does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.