Transcription
Uber is scheduled to report quarterly financial results before markets open on Wednesday, February 5th. Of course, Uber is rated as my top stock to buy right now in 2025. But still, investors that are curious about buying Uber stock want to know if they should buy Uber stock before earnings or after earnings. I'll answer that question in this video, as well as provide a preview of what to look out for from Uber when the company announces quarterly financial results.
So let's take a look at this stock. I want to thank the MLE Full for sponsoring this video. Visit full.com/parev for the 10 best stocks to buy now.
All right, so the first big thing investors should look for when Uber announces its quarterly results is the monthly active platform consumers number. In the most recent quarter, which ended September 30th, Uber said that it now has 161 million monthly active platform customers. That was up by 19 million from the same time last year, so they added 19 million new customers in one year.
Also, you want to look at trips. Not only are Uber adding new customers, but each customer is taking more trips. You have total trips of 2.868 million, or billion, I should say, and that was up by 177% year-over-year. I've been talking about this for a couple of years now, and that is the fact that people are growing to realize Uber is an excellent option, especially if you're a single individual or a couple with no kids.
Uber is a very attractive option compared to car ownership. The cost of car ownership has exploded to levels that make it very expensive, and relatively speaking, Uber is now an attractive option. You have Uber that gives you almost the same price as monthly car ownership. If you look at, you know, just a standard entry-level car, let's say a Honda Accord or a Toyota Camry, if you were to go out and buy one of those today, your monthly expense—let's say you're commuting to work four days a week and not five days a week—would probably be lower if you took Uber instead of buying that Toyota Camry or Honda Accord today.
When you incorporate all the costs of ownership, right? Not just the car payment, but also the insurance cost, fuel cost, maintenance cost, parking cost, etc. Right now, people are saying, "Why would I pay the same amount of money, or even more money, to own the car when I can take Uber?" It's a lot more convenient than having to deal with a car and all of the maintenance and time required for car ownership.
This is becoming more and more in favor of Uber as the cost of car ownership only continues to increase. Now, that trend might differ in terms of the cost of car ownership versus the cost of taking Uber. However, I don't see that happening, given that nearly every car company that I follow is focusing on making higher-priced models. Almost no car company, at least in the United States and Europe, is focusing on models priced at $25,000 or below. That's not very profitable for the car companies, and so they're going to continue to focus on higher-priced models, which is going to only increase the cost of ownership further and make it more attractive for Uber.
On the other side of the equation, the cost for taking Uber trips is going to trend downward because more and more folks are going to be interested in driving for Uber. If you're comparing working for Uber versus working for Walmart, Target, Amazon, Starbucks, or any other type of job that pays in a similar range, working for Uber is so much more convenient. You get to pick your own hours, you are your own boss, and you can work as much or as little as you want. If you want to take a day off, you don't have to ask for permission. It provides a lot more freedom and flexibility, which I find to be very attractive, and I know many folks will find to be more attractive as well.
So that increase in supply will continue in my forecasts for Uber. They will continue to add more and more drivers. Okay, so that's the customer value proposition side of the Uber business. Another thing you want to look at is the unit economics, which are the income from operations. You can see that soared to over $1 billion in the latest quarter. That was up 169% from $394 million. You want to see these numbers continue to remain elevated and demonstrate year-over-year growth.
Similarly, with free cash flow, that was up more than double, up to $2.1 billion. I've talked about this too. When a new driver joins Uber, guess what? They also bring along with them their car in most cases. So now you have this asset, this $10,000, $20,000, $30,000 asset that your workers or your contractors are bringing to your business that gets to be utilized in your business without Uber having to pay for that car—the $10,000, $20,000, $30,000 investment for each car.
So these are the reasons I've liked Uber stock. The management team has been excellent ever since Dara Khosrowshahi has come in. He's made significant changes to the business, and the profitability has soared since he took the helm over from the founders. So it checks all the marks there.
But let's look at valuation. Uber's trading at a forward price-to-earnings of just 16.7. This is near the cheapest you've been able to buy Uber stock in its history. You've rarely been able to buy Uber stock at this valuation. When you look at my discounted cash flow model for Uber stock, it suggests an intrinsic value per share of $112, when the current market price is $67. So very undervalued, whether you look at the forward PE multiple or the DCF.
Why is it undervalued? The answer to this is very easy. It's rarely this easy, and it's because of driverless car technology. People have become so convinced—the market has become so convinced—that Tesla's going to bring to market a driverless taxi or a robo-taxi business that's going to kill Uber. For that reason, the valuation is extremely low.
So if you believe that Tesla's going to bring a driverless taxi to the market and it's going to kill Uber's business, then you probably don't want to invest in Uber stock. I do not believe that, and the reason I don't believe that is because Tesla's been saying that they're one year away from delivering the robo-taxi, and they've been saying that since 2017. The company has repeatedly said that and failed to deliver on multiple occasions.
So I can trust human nature and say that, okay, they're probably forecasting—they're being a little too optimistic in their forecast for both the timing of the robo-taxi and how much of the market they're actually going to take with the robo-taxi. I think both of those things are going to come way later than their forecasting, and then it's going to take a much smaller market than their forecasting, all of which I don't think is going to kill Uber's business.
I've talked extensively about how driverless car technology is not necessarily going to be a negative for Uber's business, and I'll link to all the videos I've talked about discussing that fact. So that's why Uber's valuation is cheap. That's 90% of the reason why you can get Uber stock at this valuation.
So to answer the question about timing: should you buy Uber stock before earnings or after earnings? Uber is one of those rare situations where I feel the valuation is so cheap that you can buy your allocation before earnings. In most cases, I say to do half and half or to buy after earnings because an earnings event is so volatile; it changes a stock price so significantly.
But in this case, Uber is so cheap that I will suggest that you can buy it before earnings. In any case, I've got Uber stock rated as my top stock to buy right now in 2025, and I'm reiterating that recommendation today on January 21st.
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