8. Uber Technologies Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 136
Uber Technologies Inc. (NYSE:UBER) is a technology company that operates a global platform connecting consumers with service providers. It operates across 3 core segments: Mobility, Delivery, and Freight. It provides consumers with flexible and cost-effective transportation options, eliminating the need for personal vehicle ownership.
Its platform has evolved beyond traditional ride-hailing to Uber Eats, Uber Freight, and Uber Shopping, which collectively generate $20 billion in annual gross bookings. The company’s gross bookings were up 20% year-on-year in Q3 2024. This was driven by an increase in user frequency, evidenced by the 70% year-on-year growth in Uber One members, which now exceeds 25 million. Uber One is a paid membership program for discounts on rides and deliveries through the Uber and Uber Eats apps.
It has market dominance in major urban centers, such as its ~30% market share in New York City and ~40% in London. However, its growth trajectory is now shifting towards suburban and secondary cities, due to a surge in demand and those regions are expanding at 20-25% annually, outpacing the 10-15% growth observed in core urban areas. Uber Technologies Inc. (NYSE:UBER) has the potential to maintain its position as a leader in the mobility market.
The RiverPark Large Growth Fund broke down Uber Technologies, Inc. (NYSE:UBER)’s impressive market reach in the fund’s Q4 2023 investor letter:
“Uber Technologies, Inc. (NYSE:UBER): UBER was a top contributor in the quarter following better than expected 3Q23 earnings and 4Q23 guidance. Gross bookings of $35.3 billion were up 21% year over year. Mobility gross bookings of $17.9 billion grew 30% over last year driven by a combination of product innovation and driver availability. Delivery gross bookings of $16 billion were up 16% from last year and continued to be strong throughout the quarter. 1Q Adjusted EBITDA of $1.1 billion, up $576 million year over year, was better than management’s guidance of $1 billion, and the company generated $900 million of free cash flow, up from $358 million last year. Management guided to continuing growth in 4Q Gross Bookings (23.5% growth) and Adjusted EBITDA (of $1.2 billion).
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.1 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 $5.2 billion of unrestricted cash and $5.1 billion of investments, the company today has an enterprise value of $128 billion, indicating that UBER trades at 21x our estimates of next year’s free cash flow.”
