EXPE - Riding Uber From Cash Burn To Cash Cow: Mini Deep Dive On Uber

2024-03-05 15:27:13 ET

Summary

• Uber Technologies, Inc. shifted from significant cash burn to generating over $3 billion in free cash flow within two years, transforming into a cash generation machine.
• The platform's cross-promotion strategy enhances user engagement and spending, particularly with the successful Uber One membership program.
• Uber's diversification into delivery, advertising, and other areas, combined with AI-driven efficiencies, drive long-term growth and margin expansion.
• Its unique multi-business model and strategic expansions position Uber as a potential leader in the tech sector and the S&P 500 for years to come.

In mid-June of 2022, I published for subscribers my longest deep dive writeup on a public company, Uber Technologies, Inc. ( UBER ), which was 15,000+ words. I covered everything, from Uber's history, describing how the company evolved from just a ridesharing app to a diversified global platform for mobility, delivery, freight, advertising, and much more, to its competitive advantages, optionality, and new management, including CEO Dara Khosrowshahi, who has completely transformed the company since Travis Kalanick had finally left it in 2017.

It has been a fantastic ride thus far with my UBER position (no pun intended). I began building my position in March 2022 and adding aggressively in May 2022 through July 2022 as the stock was hitting its all-time lows. At that time, Uber was still unprofitable and burned a ton of cash but promised to become EBITDA and free cash flow positive by the year's end. With this in mind, I thought it had become a very attractive buying opportunity for investors regardless of fears of a possible recession and its impact on consumer discretionary companies like Uber....

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