My personal opinion (not prediction, opinion) is that this is a stock that could trade to $100 per share over the next two to three years. And the reason why I think this is possible is not a stretch to imagine today. While Elon Musk fantasizes about the possibility of Twitter users turning over their financial information to his demented fighting pit circus, Uber has already laid the groundwork to actually become the “Everything App” that “X” will never be. Uber has a ten year head start technologically, a massive user base (that is actually paying money) and a revenue base across which to spread the cost of this vision.
Uber is a verb. It’s how people get places. Not just on short notice like the original black town car-hailing service it started out as. You can book a car days or hours in advance now. You can be picked up by a professional driver in a Cadillac Escalade or an amateur driver in a Kia Sorento, depending on how much you want to spend. This business was crippled during the pandemic, which is why the stock fell into the 20’s. It’s come back with a vengeance. Every kind of user – business travelers, work commuters, vacationers, drinkers, partiers, urbanites without cars, teens, the elderly, you name it, they’re riding again.
Additionally, Uber has become a verb describing not just how people get places but also how they get things. The Uber Eats business now has more regular users than the Uber Rides business. Before the pandemic, Eats looked like a loser and many in the investment community were exhorting the company to wind it down or sell it off. When the plague came, Eats literally saved this company’s life. It’s now in a hyper-scaling phase with new users and drivers flocking to the platform as other, less reliable services fade away. This business has not slowed down during the reopening, like so many lockdown businesses have (Zoom, Docusign, Peloton, Zillow). If anything, it has accelerated.
Finally, Uber has been adding even more services now that its logistics and payments have been built out and proven. They’re delivering groceries. They’re bringing people items from the convenience store. Their Drizzly app delivers wine, beer and liquor all day and night. They’re bringing customers prescriptions from the pharmacy. They launched a freight business to help companies ship items by truck.
If any company today has the chance of becoming the “everything app”, it’s this one. Unlike legacy Twitter (I refuse to call it X), which barely knows anything about its users (hence the failure to build a profitable advertising business), Uber knows quite a bit about the people who use its app. For starters, they use it to pay for things. They’re using it in their own name with a credit card on file, not anonymously or pseudonymously. Most importantly, people don’t open the Uber app to argue over abortion rights or Ukraine or to casually join outrage mobs and accuse random strangers of racism. They open it because they have better things to do. They want to go somewhere or get something. Twitter is for people who have nothing to do, so they scroll it looking for a laugh or a fight.
I should point out that almost no one uses Twitter. It’s got an outsized voice in our culture because journalists and people in the media are obsessed with it and constantly talking about it. Twitter is the stock market for reporters – it’s how they can see what takes are rising and falling in popularity and what (or whom) they should be covering. In the real world, only the weirdest people you know (maybe yourself included) are on it. Only 23% of US adults use Twitter (Facebook is 69%, YouTube is 81%). In a survey this past spring, 60% of people who had used Twitter told Pew they were taking a break from it. Some 25% of current users said they were unlikely to still be using it in a year. With the name change and unintentional (intentional?) destruction of the product, 25% might be low. The odds of this platform evolving to provide financial services, rides, deliveries, video chat, gaming, etc like the super-apps in China do is very low.
Uber had a formidable competitor in Lyft in the United States but they’ve basically beaten it into submission. They need Lyft to stay alive so that they can’t be seen as a monopolist but, in practice, that’s what they are becoming on the Rides side. Lyft needs an activist to step in. It’s not big enough to compete with Uber and might make more sense as a part of someone else’s larger business. If anyone wants it. The CEO of Uber, Dara Khosrowshahi, who had taken over when the founder, Travis Kalanick, was pushed out a decade ago, rightfully saw that a robust driver ecosystem was the key to winning the category. Offering a more generous take-rate for the drivers meant a fully-stocked supply side so that users would always have cars ready to get them. This became habit-forming as people began to check Uber first. It was expensive but it paid off. Dara won the user experience game by simultaneously winning the drivers game. They’ll be writing about this in business school textbooks someday. (...)
Now, I want you to keep in mind that this is a global business and it is a large one, despite the fact that Uber is not yet mentioned in the same breath as the Googles, the Apples and the Amazons. It’s not yet as profitable as the Magnificent Seven companies and it is a much younger company (founded in 2008, public since the spring of 2019). But it is huge and growing fast.
