UBER TECHNOLOGIES

When a company name becomes a verb, you better take note! Let us uber!!!

Most of us know Uber as a ridesharing or delivery service but lets unpack what Uber has become and why this is a solid addition during the bear market. Uber has really evolved over the past decade from a ridesharing company to a diversified global platform.

What makes Uber different:

• OPTIONALITY

1. Mobility
2. Food Delivery
3. Uber One
4. Uber Freight
5. Uber Business
6. Uber Advertising
7. Uber Charter
8. Uber Travel

• STRONG COMPETITIVE ADVANTAGES

Mobility

Uber helps people go anywhere they want this is the core mission at Uber. The mobility segment is estimated to be a $5 trillion market worldwide.

Ubers vision is to be a part of the trip every time a consumer leaves the house. Instead of monthly or weekly, it should become a daily use case. This reminds me very much of Pepsis vision Pepsi wants to be there at every meal or snack you consume, be it water, a soda, energy bar etc. That worked out very well for them over the long-term.

An opportunity for Uber is hail-able taxis. This is a $120+ billion market worldwide, which is 2x larger than Uber's mobility business. Uber is focusing on getting as many licensed taxis on board as possible. Taxis open new markets for the company. For example, in Turkey and Hong Kong, the company primarily operates through licensed taxis. This subsegment grew 2.5x from 2020 to 2021.

Delivery

The second part of the Uber business is helping people get anything they need. The delivery business was launched over 6 years ago and has continued to evolve from restaurant delivery to almost anything delivery. Since the pandemic began, Uber has started to offer grocery, convenience, alcohol, pharmacy, and other types of local commerce.

The COVID-19 pandemic has played a crucial role in developing and growing Ubers delivery segments. At the end of 2019, delivery was a solid $17 billion annualized sales business for Uber and growing at healthy rates. But now, it is 3x larger than it was prior to the pandemic.

Uber One

One particular product, Uber One, launched in late 2021, should further help the company increase the usage of more of its products and more often. Uber One is a membership program that brings together the best of Uber rides, delivery, and groceries. It is the only membership program that provides discounts and exclusive experiences across both rides and delivery. The membership price is $9.99 per month or $99.99 per year, and it can be activated inside any of Uber's apps.

Uber Freight

This is a segment that many investors are less familiar with because they dont use the service on a daily or weekly basis like mobility (ridesharing) and Eats (food delivery) but freight could be a massive opportunity for Uber over the next decade.  Freight is a $4 trillion global market, with almost $1 trillion in the US alone 70%  of all goods are moved by trucks which makes it a critical component of the global economy.

Uber Freight does something that others don't. With artificial intelligence and data science it connects the right truck, at the right time, for the right shipper, for the right price, instantly. Uber Freight has become the most efficient way to procure freight in the market today. 

In 2021, Uber acquired a company called Transplace, the leading managed transportation provider in North America. Managed transportation is essentially a shipper deciding to fully outsource the logistics to a third party.

Uber Business

With the growth of Uber in popularity among consumers, more and more businesses began to notice that Uber is one of the costliest items on the list of employees' expenses. The company got flooded by various companies asking for an expense solution. As a result, Uber Business was launched. 

Uber Business is a platform for managing global rides, meals, and local deliveries for companies of any size. Companies can offer their employees integrated expense management for ordering rides or food on business travel, while Uber takes care of all receipts.

Uber Advertising

Uber Advertising brings together location-based and shopping data across the mobility and delivery channels for performance and branding campaigns. So what Uber does is it enables advertisers to engage with the consumers on the entire marketing funnel: from awareness to consideration to conversion to retention.

Uber has a global audience of 180 million monthly consumers who engage with the platform. On average, each consumer interacts with the platform about five times per month across the rides and eats services. That is a lot of interaction but still growing. 

Uber Charter

Uber Charter allows you to reserve larger vehicles, including party buses, coaches, and passenger vans, to accommodate your group. Just be sure to check in on the current COVID situation in your area to ensure a big group is a safe idea in the first place.

"Whether it's for a wedding, a wine tasting, or a work event, it's about to get easier than ever to book a bus for your next group gathering," the company said in a blog post. "No research, no stress, no surprisesand, as always, we'll show you pricing up front."

Uber Charter is launching across the US in "select cities" beginning this summer.

Uber Travel

The company also recently debuted Uber Travel which compiles flight, hotel, and restaurant bookings and allows people in the US and Canada to reserve rides for each leg of their itinerary. In the UK, the company is piloting a service to enable customers to book long-distance travel in the app.

Competitive Advantages

The technology is what makes this ecosystem thrive and another competitive advantage that Uber has. The company has built a state-of-the-art, proprietary marketplace, routing, and payment technologies. Marketplace technologies are the core of the deep technology advantage and include demand prediction, matching, dispatching, and pricing technologies.

Technology also makes it extremely efficient to launch new businesses and operate the existing ones. Another strong competitive advantage of Uber is in launching new products and scaling them efficiently and globally. The data that comes from the marketplace help go to market faster than anyone else. Uber is the only player with this kind of a breath of data on a global scale. So Uber is best-positioned than any other company to gain the biggest slice of indeed colossal opportunity.

Uber is a very strong brand, despite some controversies. As a result of a strong brand name, the company can build strong partnerships with other companies that will enable new business opportunities. "We are prioritizing a partnership approach. We are convinced that partnerships are a more effective way to scale, both quicker time to market and more cost-efficient."  from the Investor Day 2022 presentation.

Management

Uber co-founders are no longer with the company. Uber has faced many culture and management controversies over its short life. The current CEO, Dara Khosrowshahi, has built the leadership team from the ground, replacing all previous executives and appointing new ones. In total, the company has only five executive officers, including Dara Khosrowshahi.

Management owns 4% of the company, while Uber has a solid 4.0/5 rating on Glassdoor.

Risks

Like any business, Uber is not without risks.

COVID-19

The coronavirus pandemic has adversely impacted and could continue to adversely impact the business, financial condition, and results of operations.

Drivers classification

The business would be adversely affected if drivers were classified as employees, workers, or quasi-employees. The classification of drivers is currently being challenged in courts, legislators, and government agencies in the United States and abroad.

Competition

The mobility, delivery, and logistics industries are highly competitive, with well-established and low-cost alternatives that have been available for decades, as well as low barriers to entry, low switching costs, and well-capitalized competitors in nearly every major geographic region. 

Profitability

The company has incurred significant losses since its inception. If management can pull off their growth plans over the next 2 years, Uber forecasts to be profitable by 2024. You need to be patient if this is a company you believe can weather the bear market storm.

Debt

Outstanding Debt at 31 December 2021 was $9.3 billion and only $4.3 billion in cash.

Disclaimer: Nothing in this article should be seen as financial advice. Everything stated is for educational purposes. Only opinions are expressed.