Uber’s Q2 Results Beat Expectations

We are slightly increasing our Uber UBER fair value estimate to $69 from $67 and view the stock as attractive, trading at a 39% discount to our valuation. The firm reported better-than-expected second-quarter results with continued triple-digit growth in delivery and a resurgence of mobility demand driving revenue higher. In our view, Uber’s network effect moat source remains intact and may be strengthening as the firm has decided to lower driver acquisition spending while remaining confident that driver supply will continue to increase. As we’ve suggested before, integration of Uber’s mobility and delivery platforms will continue to ease cross selling to not only consumers but also drivers, thereby lowering acquisition costs for both, which will result in higher take rate and margin improvement.

Management’s third-quarter guidance implies slightly higher full-year gross booking than we projected. We remain confident that the firm will hit full-year positive adjusted EBITDA next year and GAAP profitability in 2024.

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.