3. Uber Technologies Inc (NYSE:UBER)
Number of Hedge Fund Investors: 136
Joshua Brown, the co-founder and CEO of Ritholtz Wealth Management, made the case for Uber Technologies Inc (NYSE:UBER) in a latest program on CNBC. He thinks it’s “ridiculous” to sell the stock because of the robotaxi threat. He thinks robo taxis would boost Uber’s business:
“This is the most mispriced stock in all of large cap tech. I know it’s not a tech stock by taxonomy. I know it’s considered a transportation. I cannot believe the ridiculous idea that this company’s cash flows are going to be affected by Robo taxis that are not on the road from Tesla. But that’s kind of what happened.
I think everyone understands that autonomous is the future. If you’re sitting at Uber Technologies Inc (NYSE:UBER) right now, all you’re doing is rubbing your hands together. I can’t wait. The single biggest problem for Uber is capacity. They don’t have enough rides in order to do this the way that they really want to do this.
So, if there are autonomous vehicles in cities all over America, those can be aggregated into the Uber app. Uber Technologies Inc (NYSE:UBER) is currently working on a pilot with Weo in the cities of Austin and Atlanta, where the Weo cars will be included as an option into the Uber app.
Uber is going to be the demand aggregator for the autonomous age. People selling the stock because they think it’s like a roadkill because of the Cyber taxi or whatever, they completely miss the story.”
RiverPark Large Growth Fund stated the following regarding Uber Technologies, Inc. (NYSE:UBER) in its first quarter 2024 investor letter:
“Uber Technologies, Inc. (NYSE:UBER): UBER was a top contributor in the quarter following better than expected 4Q23 earnings and 1Q24 guidance. Gross bookings of $37.6 billion were up 22% year over year. Mobility gross bookings of $19.3 billion grew 29% over last year driven by a combination of product innovation and driver availability. Delivery gross bookings of $17 billion were up 19% from last year and continued to be strong throughout the quarter. 4Q Adjusted EBITDA of $1.3 billion, up $618 million year over year, was better than management’s guidance of $1.2 billion, and the company generated $768 million of free cash flow, up from a cash loss of $303 million last year. Management guided to continuing growth in 1Q Gross Bookings (20% growth) and Adjusted EBITDA (of $1.3 billion). The company hosted a well-received analyst day in February during which it guided to three year compounded annual growth rates for gross bookings of mid-to-high single digits and EBITDA of 30-40%, both above investor expectations. The company also guided to free cash flow conversion of 90% of EBITDA.
UBER remains the undisputed global leader in ride sharing, with a greater than 50% share in every major region in which it operates. The company is also a leader in food delivery, where it is number one or two in the more than 25 countries in which it operates. Moreover, after a history of losses, the company is now profitable, delivering expanding margins and substantial free cash flow. We view UBER as more than a ride sharing and food delivery service; we also see it as a global mobility platform with 142 million users (by comparison, Amazon Prime has 200 million members) and the ability to penetrate new markets of on-demand services, such as package and grocery delivery, travel, and hourly worker staffing. Given its $5.4 billion of unrestricted cash and $4.8 billion of investments, the company today has an enterprise value of $165 billion, indicating that UBER trades at 21x our estimates of next year’s free cash flow.”
