Uber's Q3: Are We Supposed to Be Impressed, Or Just Blind?
Alright, let's talk Uber. You know, the company that basically runs our lives from getting us home after a few too many to delivering that late-night pizza we probably shouldn't order. They just dropped their Q3 earnings, and Morningstar's analysts are out there doing their thing, telling us if uber stock is a buy, a sell, or just... there. After Earnings, Is Uber Stock a Buy, a Sell, or Fairly Valued? Me? I'm looking at this whole thing and thinking, "Are we all just supposed to clap politely while the ground shifts under their feet?"
They're saying Uber's Q3 "exceeded management’s forecast." Give me a break. That's like saying I exceeded my forecast for not eating an entire tub of ice cream by only eating half. You set the bar low, you clear it. Easy peasy. The real kicker? They're talking about a measly 100-basis-point increase in adjusted operating margin. A hundred basis points. That's barely a blip, and guess what? The shares still sold off. Shocker, right? It's almost like investors can see past the rosy corporate speak and realize that a tiny margin bump ain't gonna save the day when the whole damn industry's on the precipice of a robot revolution.
The Autonomous Elephant in the Room
Here's where my blood pressure starts to climb. Everyone's buzzing about how Uber's "capturing demand with low-cost formats" because, you know, the "uneven economic recovery" means people are pinching pennies. Translation: folks are broke, so they're going for the cheapest ride or the cheapest delivery option. Uber's just riding that wave, not creating it. But the real storm cloud on the horizon, the one that makes all this "network effect" talk sound like whistling past a graveyard, is autonomous vehicles. AVs. Robotaxis. Whatever you wanna call 'em, they're coming, and they're gonna change everything.
Morningstar calls AVs an "open capital expenditure question." Open question? That's putting it mildly. Uber's whole "asset-light" business model—the one they've been patting themselves on the back for since day one—is suddenly looking like a house of cards in a hurricane. Who's gonna own these robot cars? Uber believes private equity will step up. Seriously? Uber believes it? That's not a strategy; that's a prayer. It's like hoping some rich uncle you barely know is gonna pay for your kids' college. Let's be real, this ain't an outcome management expects; it's an outcome they desperately wish for. I mean, do they think private equity just has piles of cash lying around waiting to buy fleets of self-driving cars for Uber to manage for a pittance? Who's the crazy one here? Me, for asking, or them, for hoping?
Then there's the talk about their "narrow moat rating" based on network effects. Sure, more riders, more drivers, more data. It’s a virtuous cycle, they say. But what happens when tesla stock rockets even further because their Robotaxis are out there, cutting out the middleman entirely? Or Waymo, or any other AV company? The bears are right on this one: AV companies have a superior cost structure because they don't need to pay drivers. They can just develop their own apps and poof, Uber's "network effect" starts looking less like a moat and more like a puddle you can just step over. What’s Uber’s value then? Managing charging stations and cleaning services? That's not a tech giant; that's a glorified car wash. And don't even get me started on the potential for more regulations, forcing them to treat gig workers as actual employees. That's a margin killer waiting to happen.
The Illusion of Fair Value
They've raised their fair value estimate a tiny bit, from $90 to $93, citing some "legislative victory in California" regarding insurance costs. After Earnings, Is Uber Stock a Buy, a Sell, or Fairly Valued? Great. A marginal win in one state while the entire future of transportation is being rewritten by machines. They balance this with the "significant disruptive threat" from tesla stock's Robotaxis. So, it's "fairly valued" because of this massive, existential threat? That's some twisted logic. It implies that without the AV boogeyman, it'd be overvalued. And let’s not forget their partnership with Toast, supposedly clearing the runway for food delivery. Maybe, but uber eats is still a brutal market, and dash stock (DoorDash) isn't exactly a walk in the park either.
They're throwing around words like "operating performance, free cash flow, and network effects are all strong." But then they immediately slap you with the "however, the company is only fairly valued, given AV risks." It's like saying, "This car is amazing, but it's only worth a normal price because the engine might explode." You can't just wave away the biggest risk as if it's a footnote. The "Very High Uncertainty Rating" they assign Uber is the only thing I truly agree with. It’s not just high uncertainty; it’s an absolute gamble. And they expect us to just... buy into that? The whole thing feels like a carefully constructed narrative to keep the ship afloat while the icebergs are already in sight.
So, What's the Real Deal?
Look, I get it. Uber's everywhere. They've built something massive. But the facts, when you strip away the corporate gloss, point to a company playing a high-stakes game of chicken with the future. They're clinging to an "asset-light" dream that's fading fast, hoping private equity will bail them out of vehicle ownership, and praying that autonomous vehicle companies will just partner with them rather than cut them out entirely. It's not a question of if the AV revolution is coming; it's a question of whether Uber will be a passenger or roadkill. Right now, based on these numbers and their desperate "beliefs," I'm leaning towards the latter. This ain't a moat; it's a sandcastle, and the tide's coming in.