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SUMMARY
Parkev Tatevosian, CFA, analyzes Uber's recent quarterly performance, highlighting robust growth in bookings and profitability despite challenging market conditions. He discusses Uber's valuation, the impact of market perceptions around driverless technology, and his continued confidence in the stock's long-term potential.
MAIN POINTS
- Uber's stock price increased over 8.5% following the release of strong quarterly results.
- Despite rising oil and gas prices due to global conflicts, Uber achieved 21% year-over-year growth in gross bookings and record profit margins.
- Uber's delivery segment outpaced mobility with 23% growth, and the company views driverless car technology as an opportunity rather than a threat.
- Uber is trading at its lowest forward price-to-earnings and price-to-operating-cash-flow ratios since January 2024, aside from a brief dip in April 2025.
- Market fears about Tesla's influence and driverless cars have kept Uber's valuation low despite strong business fundamentals and growth.
- Tatevosian continues to buy Uber shares, valuing them at $130 based on his discounted cash flow model versus the current market price of $79.
DETAILED ANALYSIS
Uber's latest quarterly results have driven its stock price up by more than 8.5%, reflecting investor optimism about the company's financial performance. The company reported a 21% year-over-year increase in gross bookings, a notable achievement given the challenging environment marked by geopolitical conflict and rising oil prices, which directly impact transportation costs. Despite these headwinds, Uber managed to accelerate its mobility segment growth to 20% and achieved record profit margins, indicating strong organic demand rather than reliance on incentives or discounts.
The delivery segment, encompassing grocery and retail, grew even faster at 23%, supported by high customer retention. This segment is viewed as having greater long-term potential and is considered more resilient to the risks posed by emerging driverless car technologies. While some investors fear that companies like Tesla could disrupt Uber's business model with autonomous vehicles, Uber perceives this technological shift as an opportunity.
Market skepticism, fueled by Tesla's strong influence and bold claims, has contributed to Uber's relatively low valuation.
Currently, Uber trades at a forward price-to-earnings ratio of 21.64 and a forward price-to-operating-cash-flow ratio of 14.46, both near their lowest levels since January 2024, except for a brief period in April 2025 following the announcement of new tariffs. Despite consistent revenue and profit growth exceeding 20%, Uber's stock remains attractively priced. Tatevosian has taken advantage of these valuations, purchasing shares at $68 and $72, and plans to continue accumulating as long as the price remains in the $70 to $80 range.
His discounted cash flow analysis suggests a fair value of $130 per share, reinforcing his view that Uber is undervalued and remains one of the best investment opportunities currently available.
LINKS
- YouTube channel membership for exclusive perks and early access to videos.
- Special offer for The Motley Fool Stock Advisor.
- Parkev Tatevosian's book on a six-step investing framework.
- Fiscal.ai investment research tool with a viewer discount.
- Substack newsletter subscription for monthly updates.