UBER fears caused by AVs is the same story as Seaech Ai fears was for Google

AI Summary

Author argues UBER's AV-related selloff is overdone because Uber can be an AV distribution platform rather than AV competition, with potential multiple expansion as mass AV adoption takes years.

UBER — LONG The author claims UBER is beaten down by autonomous-vehicle fears similar to Google's search-AI fears, arguing the market wrongly prices AVs as competition rather than synergy. The proposed mechanism is that Uber's user base and market penetration let it act as an asset-light distributor for AV players like Waymo, not a direct AV operator, and the narrative could shift because mass AV adoption is still a couple of years away. The stated catalyst is a potential re-rating to a 30-35x P/E as a tech growth stock; the main stated risk is that AVs play out and Uber is left without partners as its traditional driver fleet ages out, hurting gross bookings.

I believe AV is not here as Uber’s competition, rather Uber has the user base and market penetration to leverage themselves as a distributor for AV’s whilst keeping their asset light business structure intact.

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$UBER is currently pretty beaten down due to AV (Autonomous Vehicle) fears.

It’s currently trading at a Forward P/E of x25. The market is pricing $UBER in a way that deems AVs as its competition rather than synergy. I believe these fears are overblown and this play will end up being similar to Google around mid last year, where Google stock price was suppressed by both the Antitrust Monopoly lawsuit against them and more importantly, fears of search AI taking over Google search.

In a similar fashion, I believe AV is not here as Uber’s competition, rather Uber has the user base and market penetration to leverage themselves as a distributor for AV’s whilst keeping their asset light business structure intact.

Currently the main AV player to look out for is Waymo, and perhaps Tesla if Elon gets his act together. Waymo currently operates in 5 cities in the US, with 1 city partnering with Lyft, 2 with Uber, and the remaining 2 with themselves, constituting a testing phase to see what works in terms of distribution, market penetration and how to optimally roll AVs out.

If you can see Uber as collaborating with AV in the future and being the primary distribution platform rather than competing against it, the upside story looks quite convincing. This story is further compounded if you believe that AVs will not end up being a winner take all market, rather a fragmented market where Uber will remain as a major player.

But with the TAM for AVs being so large, and the payback period for AVs being so high currently, it’ll take ages for it to become a winner takes all market if it even does. I think the market is being way too scared of Uber right now and eventually the narrative will shift when we realise mass AV adoption will still take a couple of years to implement, hopefully leading to a multiples expansion to 30-35P/E as a reasonable tech growth stock in the current markets.

Obviously the risk in this thesis is that the AV story plays out, and Uber is left in the dust with no partners and as the traditional fleet of drivers ages out, so will their gross bookings. However, I’m not particularly worried. They’ve partnered with Nvidia, they’ve partnered with Avride, Costco, hell even Sephora. Feels like something will stick.

TLDR: AV fears are overblown and Uber will come out as a winner as a distributor rather than a direct AV competitor.

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u/XDPie Reddit r/stocks

Uber is AV distributor, not AV competitor; multiple re-rating

The author claims UBER is beaten down by autonomous-vehicle fears similar to Google's search-AI fears, arguing the market wrongly prices AVs as competition rather than synergy. The proposed mechanism is that Uber's user base and market penetration let it act as an asset-light distributor for AV players like Waymo, not a direct AV operator, and the narrative could shift because mass AV adoption is still a couple of years away. The stated catalyst is a potential re-rating to a 30-35x P/E as a tech growth stock; the main stated risk is that AVs play out and Uber is left without partners as its traditional driver fleet ages out, hurting gross bookings.

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