Why Uber Is the #1 Stock Wall Street Is Getting Wrong
Overall Thesis
Uber is a significantly undervalued stock trading at 15x earnings with strong revenue growth, margin expansion, and autonomous vehicle upside that could deliver 10x returns, making it Wall Street's biggest mispricing.
Narratives
Travis argues Uber's apparent revenue slowdown is an accounting artifact from a UK revenue-recognition change, not business weakness, while bookings, margins, and free cash flow are all improving. He believes Uber's aggregator strategy in autonomous vehicles positions it to become a much bigger and more valuable company over the next 5-10 years, with the market eventually re-rating the stock's multiple higher.
Key Arguments
- Bookings grew 22% in the quarter, reflecting true underlying growth of 20%+ CAGR
- UK accounting change (driver payments moved to contra revenue) created an 8-point headwind to reported revenue with zero impact on gross profit, operating profit, or free cash flow
- Operating margins and free cash flow are both consistently rising on a trailing 12-month basis
- Uber is live with autonomous vehicles in 7 cities, on track for 15 by year-end, positioning itself as the demand aggregator for multiple AV hardware and fleet partners
- Stock trades at just ~15-16x earnings and ~10-11x free cash flow, which he views as cheap given growth and margin trends
Travis calls Alphabet a past asymmetric investing win and one of his biggest current portfolio positions, citing Waymo's autonomous vehicle strategy as a strength. He contrasts Waymo's vertically integrated approach favorably but sees it as complementary rather than competitive with Uber's aggregator model.
Key Arguments
- Alphabet was identified as a mispriced opportunity about 18 months ago and became one of his biggest portfolio positions
- Waymo (Alphabet) has a 'phenomenal strategy' as the first mover in autonomous vehicles, vertically integrating its business
Travis briefly references Meta as a past example of a stock Wall Street got wrong in 2023, calling it a great buying opportunity at the time. This is a retrospective comment, not a current prediction or active thesis in this video.
Key Arguments
- Cited as a past example where short-term worries created a buying opportunity
Hedges & Caveats
- Revenue growth deceleration in recent quarters due to UK revenue recognition changes
- Autonomous vehicle strategy success is not guaranteed
- Market sentiment currently negative on Uber stock post-earnings
- Multiple expansion dependent on investor sentiment shift
- Analyst acknowledges this is a personal portfolio position with potential for future additions