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Uber Technologies Inc UBER

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Uber’s Delivery Network Effect Continues to Strengthen; Raising FVE to $51; Shares Remain Attractive

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

While Uber Technologies posted mixed third-quarter results, we continue to be impressed with growth in the firm’s delivery segment and a gradual improvement in the mobility business. We are increasing our fair value estimate to $51 (from $48) as we have assumed stronger delivery revenue growth in 2021 and beyond, driven by long-term changes in consumer behavior toward more online food delivery and pickups. Additionally, we expect the firm to further accelerate partnerships with more restaurants, increasing the supply side of what appears to be a strengthening network effect. We lowered our projections for the firm’s mobility segment a bit as the recent surge in coronavirus cases in Europe and North America has created more uncertainty. While the stock has nearly tripled from March lows, we believe its current 21% upside (based on our fair value estimate) remains attractive.

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Company Profile

Business Description

Uber Technologies is a technology provider that matches riders with drivers, hungry people with restaurants and food delivery service providers, and shippers with carriers. The firm's on-demand technology platform could eventually be used for additional products and services, such as autonomous vehicles, delivery via drones, and Uber Elevate, which, as the firm refers to it, provides "aerial ride-sharing." Uber Technologies is headquartered in San Francisco and operates in over 63 countries with over 110 million users that order rides or foods at least once a month. Approximately 76% of its gross revenue comes from ride-sharing and 22% from food delivery.

1455 Market Street, 4th Floor
San Francisco, CA, 94103
T +1 415 612-8582
Sector Technology
Industry Software - Application
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Distressed
Employees 21,600