Uber

Uber is the strongly leading ride-hailing company globally, with over 70% market share of gross bookings in the US, its largest market (over 50% of its overall gross bookings); 70-80% share in Latin America (~20% of gross bookings); and 75% of gross bookings in the UK (~6% of gross bookings).

The ride-hailing market should still be able to grow in the teens over the next five years. Uber has several opportunities to increase usage frequency. For example, 6.5% of the adult population in Australia use Uber weekly, compared to just 3.9% in the US and 1.3% in France. Uber can work to actively improve this by lowering costs (it recently re-introduced its shared uber product and is bringing on additional supply in emerging markets such as high-capacity vehicles and tuk-tuks) and expanding use-cases (e.g. Uber reserve for airport pick-ups, multi-day rentals).

UberEats is a relatively weaker business, with no.2 or no.3 positions globally. However, because it is part of the Uber platform, it benefits from lower customer acquisition cost than its peers. For example, the company notes that the rides app generates over twice the number of new delivery consumers as all other channels it advertises on at a quarter of the cost of paid channels.

The company is also investing in a convenience delivery service that will allow the company to continue growing once rides and Eats are more mature.

There are significant opportunities to monetise many of these services via advertising, which various global food delivery companies have stated could grow to 2-5% of the value of items sold on the platform.

Uber has committed to achieve adjusted EBITDA of $5bn in 2024 and is on the cusp of profitability on a free cash flow basis after stock-based compensation. Uber is trading at 14 times our assessment of normalised 2023 earnings.