N※N

Uber Way Too Cheap: Intrinsic Value Exceeds Current Price

  //stocks-investing.news-articles.net/content/202 .. cheap-intrinsic-value-exceeds-current-price.html
  Published in Stocks and Investing on Wednesday, December 24th 2025 at 11:21 GMT by Seeking Alpha

Uber Way Too Cheap – A 500‑Word Summary

Uber Technologies (NYSE: UBER) has long been a staple of the “ride‑hailing” conversation, yet the Seeking Alpha piece “Uber Way Too Cheap” argues that the stock is far more attractive than its current price suggests. The author builds a case around a combination of fundamental undervaluation, a clear trajectory of earnings recovery, and macro‑economic trends that are poised to play out in Uber’s favour. Below is a comprehensive recap of the article’s arguments, the supporting data it cites, and the additional context gleaned from the linked resources.

1. The Discount to the “Fair Value” Benchmark

The cornerstone of the article is the quantitative valuation model that places Uber’s intrinsic value roughly $60–$70 per share, while the market price is hovering near $45. The author uses a Discounted Cash Flow (DCF) framework that incorporates:

• Projected free cash flow (FCF) for the next 10 years, derived from the company’s revenue growth estimates and expected margin expansion.
• Terminal value calculated using a perpetual growth rate of 2.5 % (in line with long‑term GDP growth) and a discount rate of 8.0 % (based on Uber’s weighted‑average cost of capital).
• A sensitivity analysis that shows even under conservative assumptions (e.g., 1‑year revenue growth of 7 % vs. 12 %) the fair value remains well above the current market price.

The author also compares Uber’s EV/EBITDA and Price/Earnings (P/E) multiples to peers such as Lyft (LYFT), Bolt (BOLE), and Grab (GRAB). While Uber trades at a slight premium to Lyft, its multiples still sit below the industry average, further substantiating the “cheap” thesis.

2. Uber’s Earnings Trajectory: From Losses to Profitability

Revenue Growth

The article cites Uber’s FY 2023 revenue of $28.3 billion, up 34 % YoY, largely driven by:

• International expansion – India and Southeast Asia saw double‑digit growth in rides and food delivery.
• Diversification – The company’s delivery arm (Uber Eats) continues to generate a higher share of total revenue.
• Enterprise solutions – Uber’s “Freight” and “Pro” segments are capturing larger freight contracts and workforce management services.

Cost Management

Uber’s EBITDA margin has improved from –27 % in FY 2022 to –10 % in FY 2023. The author explains that this is due to:

• A higher driver incentive payout strategy that is now calibrated to reduce over‑exposure while keeping supply elastic.
• Technology efficiency – A new “smart routing” engine that cuts per‑trip delivery time by 12 %, thereby lowering fuel and labor costs.
• Capital discipline – A reduction in discretionary spend on marketing and real‑estate.

The article links to Uber’s FY 2023 10‑K (https://investor.uber.com/financials), which provides a detailed breakdown of the cost components, reinforcing the narrative that the company is on a path toward EBITDA positivity.

Forecasted Turn‑around

Using a margin expansion model, the author projects Uber’s EBITDA margin to reach +3 % by FY 2025 and +8 % by FY 2027. The model is built on an assumption that:

• Gross margin will improve from 38 % to 43 % as fixed operating costs are spread across a larger revenue base.
• CapEx will remain low (< $0.5 billion) as the firm focuses on autonomous‑vehicle pilot projects instead of traditional vehicle purchases.

3. Macro‑Factors That Bolster Uber’s Outlook

Ride‑Hailing Demand

• Post‑COVID recovery – Even after pandemic peaks, Uber’s ride‑hailing demand remains 12 % above 2019 levels, suggesting residual pent‑up demand.
• Urbanization – A UN report (link in article: https://www.un.org/urbanization) indicates that over 60 % of the world’s population will live in cities by 2030, increasing the need for on‑demand transport.

Delivery & Logistics

• E‑commerce boom – Uber Eats continues to capture 14 % of the global food‑delivery market, up from 10 % in 2021. A 2024 Gartner report (https://www.gartner.com/en/consumer-insights) points to a 5 % CAGR in global online food delivery.

Autonomous Vehicle (AV) Horizon

• Pilot programs – Uber’s partnership with Aurora (link: https://www.aurora.ai/uber) has expanded to three North American cities, targeting 500,000 rides per month by 2026.
• Cost‑savings – Early AV data suggests a 30 % reduction in per‑ride labor costs, providing a “fire‑wall” against driver‑related volatility.

4. Risks – The Counter‑Side of the Argument

The article does not shy away from potential downside:

• Regulatory pressure – Ride‑hailing is under scrutiny in several major markets (EU, India, Brazil). A tightening of driver‑licensing rules could increase compliance costs.
• Competitive churn – New entrants such as Grab and local startups may erode Uber’s market share in key regions.
• Capital‑intensive AV rollout – The risk that AV development costs could exceed projected savings, pushing Uber’s capex into the high single‑digit billions.

These risks are mitigated in the article by pointing to Uber’s cash‑rich balance sheet (current ratio of 3.2:1) and the company’s willingness to sell non‑core assets (e.g., Uber’s stake in the autonomous‑vehicle firm Motional).

5. Bottom Line – Why the Stock Is “Too Cheap”

The author concludes that:

1. Valuation Gap – Even under conservative assumptions, Uber trades at a 20–25 % discount to the model’s fair value.
2. Earnings Recovery – EBITDA margin improvement and revenue growth suggest an imminent profit‑turnover.
3. Macro Upside – Urbanization, delivery momentum, and AV breakthroughs provide a long‑term tailwind.
4. Strategic Flexibility – Uber’s diversified portfolio (rides, food, freight, and enterprise services) reduces exposure to any single segment.

The article encourages investors who are comfortable with the company’s regulatory and technological risk profile to consider Uber as an attractive entry point, especially if the market continues to underprice its future earnings prospects.

In Summary

“Uber Way Too Cheap” argues that Uber’s current price reflects a significant over‑conservative view of the company’s trajectory. By blending a robust DCF model, a track record of cost discipline, and a favorable macro backdrop, the author paints a picture of a company on the cusp of a sustainable profitability renaissance. The article invites readers to re‑evaluate Uber not as a “ride‑hailing” company but as a diversified mobility platform poised for a 2025‑2027 earnings revival, and it suggests that the market has not yet fully priced in this narrative.