Analyst Note| Ali Mogharabi |
We are maintaining our $69 fair value estimate for narrow-moat and 4-star rated Uber. The firm filed an 8-K with the SEC on the morning of Sept. 21 in advance of a presentation at an investor conference later that day, providing an updated outlook for the second half of the year. The firm stated that it generated positive adjusted EBITDA in July and August. In addition, Uber slightly increased its third-quarter adjusted EBITDA guidance and is now more confident that it will generate positive adjusted EBITDA in the fourth quarter. We are not making any changes to our projections. In our view, the better outlook provided by the firm is a result of Uber's network effect moat source remaining intact, which we think has allowed the firm to lower driver acquisition spending even as driver supply has continued to increase. The 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 should result in higher take rate and further margin improvement.