Why Uber Stock Looks Like a Steal Right Now

Uber was one of the most disruptive companies in the 2010s, but in the 2020s, investors have a lot more questions about the company's future. So, I want to talk to Neil about what is going on at Uber. The big question I have for you, Neil, as I as I look at Uber stock right now, trading for 17 times trailing earnings, 18 times forward earnings, despite the fact that gross bookings are growing right around 20%, you oftentimes in excess of 20%. Why does the market have such a negative view on Uber today? Okay, let's start there before we get to the bullish side of things. >> Yes. So, I'll do the the reverse answer. So, it's not because of the lack of growth. It's not because of the lack of trips, not because of the lack of utilization, nor the the lack of of free cash flow. It's it's purely in my eyes purely because of autonomous vehicles and the fear that autonomous vehicle could completely destroy a business like Uber. Meaning if you have a fleet of autonomous vehicles, whether you're Whimo, Tesla, or any other upcoming AV company out there, there are many, which we'll talk about in a bit. Why this is actually pretty good for for Uber, but the the fear is that let's say Whimo and Tesla take 90 plus% of the market. You don't need a platform like Uber, right? You just have your own app. People go on it, they book a ride, and that's it. And Uber becomes obsolete. Whether that's realistic or not in my eyes, no. Otherwise, I wouldn't own the stock. But the market still has some questions despite Eber proving every single quarter that they see growth across the board. Let's talk a little bit about the way that these markets typically play out because I think the historical context here and the way that Uber has built its business is is worth at least covering at a high level. Whimo was really developed as this vertically vertically integrated company from the start because they were developing the technology at the same time. And you can go back to you know Apple with their early PCs in the 1970s uh the early the early uh iPhone. You can go to General Magic uh which eventually became the iPod. They were inventing a whole bunch of stuff because that stuff didn't exist for the product that they wanted to make. So typically what happens in technology changes like this is the first player vertically integrates. That's what Tesla intended to do from the start and they intended to then have not only vertically integrate but then also have the lowcost provider vehicle. Note that they are still not at the point where they are have really launched anything at scale despite the fact that they've been operating in Austin. They're they're actually their growth is slowed which I think is interesting but they're a vision only system. I think that's their biggest challenge right now. Whimo, not a vision only system. They do have redundancies and they have proven that not only can they operate their vehicle without a driver. They can now scale the business. I think they're operating in 15 cities at this point. So, they're starting to grow that. They're starting to put this uh this new vehicle on the road. I'm not even going to butcher the name. Uh but, you know, a c basically a custommade vehicle. It isn't quite, you know, a complete redesign the way that ISUK's vehicle is. But it isn't surprising to see those early companies vertically integrate. What happens next though, I think is most important for Uber. What typically happens next is you start to modularize the business and figure out where is the point of value. So you look at the PC, you might have bought a gateway PC in the '90s or a Dell PC or an IBM PC, but they were all running Windows and they were all operating on Intel chips. So that's where the profit was and the power was and when I look at this market where is the power and the profit 5 years from now 10 years from now if we are riding in autonomous vehicles all the time well it's the place where you're going to choose an app who is aggregating that demand and I still continue to think that that is the most powerful position and when you open up your phone and you need a ride somewhere what app are you choosing that's probably Uber and that's a pretty darn good position for them to be And long term >> I agree I people also view Uber only as oh I need I need a ride but side of things is huge for them and every time I hear the argument yeah but is that they can scale fast no they cannot if Uber wants to enter a new market they will enter a new market they don't have to make sure that oh they have a car that can drive autonomously in that specific city in that specific town it's it's a very big difference they can go into a new market much quicker than than AVs. Then there there is this if if you want to switch already to the AV uh conversation, there is this outlier, right? San Francisco. San Francisco is a place where yes, if you go there, you see autonomous vehicles. You see a lot of things that you don't see in other cities in the United States, especially not in Europe. Now, I'm someone that did go into an autonomous vehicle like a Whimo. I did drive in a Tesla that did drive itself. Although you did need to to sit in the driver's seat. It did an excellent job. Both of them I enjoyed my time. It drove me from point A to point B. No problem. The thing with the argument that oh look San Francisco look at what is happening there. So there there were some stats that the Uber CFO pulled up. So, San Francisco has 2x the probability the population density of Los Angeles and 4x the US top 50 city average. San Francisco trips are also 60% shorter than Los Angeles and 46% shorter than the top 50 city average, making trip turnarounds faster and fleet battery management easier. As for demographics, it has a higher median outcome uh income. 2x is the top 50 average. So of course when there's a new technology that comes out and usually that's more expensive, yes, it's going to be more popular in San Francisco than in other places. And so to say that San Francisco is the example that you can use for all the other, let's say, top 50 cities in the US, it just doesn't make it just doesn't make any sense to me. The other thing from a supply side that I think is really interesting and we're we're sort of reaching that inflection point now is Uber said on their second quarter 2026 conference call they're going to be operating autonomous vehicles did not say without safety drivers but autonomous vehicles in 15 cities by the end of this year and that's from multiple suppliers. And so when you think about scaling Whimo's business, that's going to involve them buying more vehicles. It's going to involve them, you know, building out those operations, building out the fleet management, all of that kind of stuff that they have to do themselves. Uber is doing this, like I said, with a modular approach. So if let's say Zuks is doing really well, well that's you can get a Zuks in Las Vegas uh on Uber. Let's say that mobilized vehicles are which that's powering the Volkswagen vehicles. Their Moya is the is the company that they're working with. Let's say that that scales really well. Okay, so we'll grow with them. Maybe AVID is doing really well. Okay, we're happy to grow with them. Wave is another one in Europe and then I think that's the one that they're operating in Japan as well. So there's lots of different ways. They don't have to have one specific winner. They can look at all these companies. BYU is another one that they have a partnership with. Nvidia is another company they have a partnership with. They've got a dozen companies that it's it's like having a bet on every single horse in the race except for one, which is which is Whimo. You could maybe include Tesla in that as well. But I think when we look 10 or 15 years out, as long as they hold that demand, they're going to be able to have tons of new suppliers and bring on those suppliers with different strengths, too. That's that's the other piece that we haven't even really started thinking about is what happens in a world where you know what there's a commuter vehicle because I'm a I'm a solo person that's trying to just get to work. All I need to do is do it cheaply or maybe I want to get picked up with my entire family. We got a family of five and we have a dog. They've all got to fit. They got to have some car seats. Well, maybe there's vehicles for that. And you know, maybe there's delivery specific vehicles. Maybe there's roving CVS's that has, you know, cold medicine and stuff like that. Like there's so many different things that you can do from an innovation standpoint if you're not just built on one vehicle and one platform that I I still tend to think happens on Uber because they're allowed to have those multiple flowers bloom in the garden and we've got all the demand. All that demand sits with us. You want to be an innovative supplier, come along. We're happy to have you. >> Yeah. And even if we go and we think about okay Whimo Tesla let's say they are successful they're scaling up both of them have hinted towards maybe licensing >> their technology to others well if you're licensing your technologies to other to other automakers that means that suddenly we have multiple players in those markets I I don't see Volkswagen or or BMW or whatever list their fleets only on Whimo app why would they like why not list your cars or your fleets on the app that does billions of trips each and every year. That's also the thing like the difference between Uber and Whimo. Uber does billions of trips. Yeah, Whimo is is far far behind. And again, I I I'll pull up here some some extra stats here. Standalone Whimo represents just.9% of national gross bookings market share as of mid 2026. I actually think that's really impressive, but yes, it's a very small number. >> Oh, it's it's very impressive. We're still super early, but every time I hear, oh, Whimo is growing, Whimo is taking market share from Uber. Uber consistently holds around 60% market share across the the major zones that they're operating in. And with in core markets like San Francisco and Los Angeles, Whimo's market share peaked apparently in early 2025 around 28% and now it sits around 15% mid 2026. But you told me that that's also because they've expanded the area that >> Yeah. So that may be a little bit of difference in measurement. You know, if you're only operating in a six block area, you have a 100% share in that six block area. You go to a six mile area, you have a you have a lower share. So, we just want to note that this that isn't maybe isn't quite an apples to apples um comparison, but yeah, I think your point is right is that in in a even in the places where Whimo is operating, they're not necessarily getting 100% market share. The other thing that I think is worth mentioning while we're while we're talking about sort of the future business model is the way that the market could expand. And I think that this is one of those areas where the number of rides, the revenue, whatever metric you want to use, can easily 10x over the next 10 years, maybe even more. Just think about rides alone. 51% of the population is going to be much more likely to get in a ride with an autonomous driver than with a human driver. That alone is a very valuable piece of the market. Expands the market dramatically. Then you go to what if vehicles are more available, right? So where I live, it's a 5 to 15 minute wait to get an Uber or a lift ride. If there's more vehicles around, even if they're not utilized, you know, 90% of the day and it's a 2-minute ride and maybe it even costs less, I'm going to be much more likely to take that autonomous vehicle if I'm going downtown or if I'm going somewhere, you know, somewhere to meet up with a with a friend where I don't want to have to be able to drive myself. Those are all market expanders and the increase in supply. We've seen this with Uber, right? This was the big thing Darra did when he came in as CEO. The the differentiator for Uber is having the supply. It isn't just the demand. It's that the the supply actually leads to the demand. And that's the piece where I think they've done a ton of work in autonomous vehicles saying, you know what, we're going to have way more supply. Not this year, but in five years, in 10 years, we're gonna have way more supply than Whimo and Tesla and whoever else. So, when you open up the Uber app, you go, "Oh my gosh, I can get picked up in 45 seconds because there's a there's a vehicle waiting in the parking lot down the road from me. Uh, and it's only going to be a dollar a mile. Sign me up. Why do I even own a vehicle?" >> No, I It's People have to think about it. It's Uber getting $5 that they didn't get before because I didn't want to spend that that extra money to to wait uh more. Think about this way. If they let's say they have two rides, each rides is $10, so $20 in total. Well, what if they can do 10 rides, $3, the price has come down, but they're now making 30 bucks. So 50% more. That that's what I see is going to happen because for me it costs less, >> but they still make more. Yeah. And the other thing I I think we often get a lot of questions about the economics of these autonomous vehicles. Um that's something that I know VCs have talked about for a long time. I ran the numbers on on Whimo a while back and they were doing somewhere around they don't they don't publish their numbers, but you could just sort of back out. They're doing somewhere around 24 rides a day per vehicle. If if each of those rides is about $20, okay, put whatever number you want in. They're operating 365 days out of the year. That's very low utilization on a per hour basis. It's only that's only one ride per hour, but that's $175,000 in revenue for one vehicle. So, your operating costs would have to be astronomical and theoretically these operating costs should be lower than with a human driver. So, I think the economics will ultimately work and the prices will actually come down as well. Okay, let's end with this and that is the stock. When you look at Uber's stock today, uh enterprise value of sales is about three. Uh price earnings multiple I mentioned earlier, 17 on a trailing basis, 18 on a forward basis. Where do you think this stock stock's trading about 75 $76 per share right now? Where can this be 5 10 years from now? >> Funny enough, last year at the start of last year, I said we'll be a $100 stock in 2025. It ended at at close to $100 in in 2025. Now we're back down. It's still expected to grow, I think, 15 16% revenue each year for the next three years or so. Earnings I I don't see, by the way, valuation wise, Uber and Whimo is is very very close one to the other despite Uber >> the market cap. >> Yeah. Yeah. >> Yeah. Market cap. Yeah. Market cap. Despite Uber generating over $50 billion in revenue and way more, I don't know, way less. Um but yeah, couple of years down the line, they either are worth less or they are worth a lot more than where where we're at right now. That there I don't see where there is going to be an in between here. And my money is in on the fact that they're going to be worth way more than whatever they're worth today. I'm I'm going to say 10 years from now, this is a company that can be worth 10 times what it is today. So that would be about a $1.5 trillion company, $750 a share. The other thing that they have the opportunity to do if they choose to is buy back a whole bunch of their own stock. They're generating about $10 billion or so in free cash flow. So if the stock continues to trade at relatively depressed multiples, depending on what the capex looks like, if they're going to be owning vehicles or financing vehicles, we don't know exactly what the the full business model is going to be with these autonomous vehicles. There's going to be capital involved. They've invested in a bunch of these companies like Lucid, uh, like Rivian. I don't know that that's necessarily a great use of capital, but they want these suppliers to to all survive. Uh, so that's the thinking right now. But, you know, long-term there may be capital costs required, but they can also, like I said, buy back that stock. So, maybe the the share count goes down over time as well. But, I think this is a this is one of those rare opportunities where there's a dislocation in the market. Stock is trading at a pretty good valuation and has a lot of growth runway ahead. So, I think we're both uh on the same page there. Let us know what you think about the future of Uber in the comments section below. Don't forget to subscribe to the Mile Pulse channel here on YouTube. Thanks for watching everybody. See you here next time. Bye-bye.