Uber (UBER): A different company vs one year ago

The quality of Uber's business is much improved, in fact we would argue that it is now in the winners camp, whereas one year ago it wasn't.

Cost cutting, structural growth, plus a cyclical tailwind in 2021 for Rides gives a lot of potential upside in EBITDA, especially as high and positive incremental margins are now proven.

• Over the past 12 months Uber has restructured operations with a clear focus on profitability. Uber’s operations are now almost entirely in markets where it is either #1 or #2 player.

• In the past, competitors used capital for inefficient acquisition of either supply or demand, this has now rationalised.

• Uber’s global and local scale are unique competitive advantages. Both Rides and Delivery are seeing rapid consolidation leading to network densification.

• Subscription products will drive user loyalty and frequency. We think Uber’s promotions are better than Lyft or Doordash because they can bundle. It is clear to us that, again, scale is critical.

• External business risks, which have put us off in the past, have declined materially.

Potential Upside: $77 (+52%)

Sensible Downside: $35 (-31%)

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