Uber Technologies (UBER)

By both methods, the value today (DCF $103 · Multiples $110) exceeds the market price ($72).

Today — fairly valued: at $72 trades ~35.0% below its value discounted to today (~$110); the discount is positive but does not reach the margin of safety we require (≥38%).

At 5 years — Infravalorado: the target price ($137) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$68.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($72) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (3.8%/year) than we project (12.0%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$7 bn of owner earnings in year 5 (vs ~$10.3 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). Cash accumulates the retained surplus —what is not returned as dividend or buyback—, so that EV falls and multiples compress going forward. The valuation is done on EV/NOPAT (consolidado). In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

Uber is valued as a single platform intermediation business (a marketplace), not as a sum of parts of different natures: Mobility, Delivery and Freight share the same economic model (a commission on Gross Bookings, capital-light, the same technology infrastructure for matching supply and demand and for payments), so they are projected and added on a consolidated basis under a single EV/NOPAT exit multiple. The valuation is of the standalone business: it does not incorporate the public takeover offer for Delivery Hero announced on July 16, 2026 (€41.50 per share in cash, an equity value of US$14.8 billion for 100%, or US$13.7 billion adjusted for the stake Uber had already bought), pending closing and financed with acquisition loans (8-Ks of July 16, 2026 and August 7, 2026). Year 0 is the TTM ended 30 June 2026 (revenue US$55,227 million, EBIT US$6,700 million). Two mandatory normalization adjustments: (1) the GAAP effective tax rate for the period is an artifact (negative, from the release of US$5,000 million of the deferred tax valuation allowance in the Netherlands in 2025 and other discrete effects) — the non-GAAP effective rate the company itself publishes in its reconciliation is used (24% in the second quarter of 2026 and in the half-year cumulative), never a typical rate; (2) reported revenue growth is temporarily depressed by a business model change the company quantifies in its earnings release: it subtracts 8 percentage points from year-over-year revenue growth, both reported and in constant currency, in the second quarter of 2026. Gross Bookings, which are unaffected by that accounting change, grew 24% reported and 22% in constant currency in the same quarter, and the guidance for the third quarter of 2026 maintains that range (18% to 22% in constant currency). Year 1 of the revenue path starts below the historical revenue growth band (17-18.3% over the last three fiscal years) precisely because of this declared effect, not because of an under-start: it is anchored close to the pace actually observed in the most recent quarter (11-12% in constant currency) and decays smoothly toward a terminal 8%, consistent with a large platform business that keeps gaining share in Delivery and expanding advertising and Uber One, but that already operates at a scale of US$55,000 million of revenue. The operating margin (EBIT) starts at 12.1% TTM and expands moderately toward 15.6% in year 5, supported by the operating leverage the company has been demonstrating (the GAAP EBIT margin went from 6.4% in 2024 to 10.7% in 2025) and by the non-GAAP earnings per share guidance for the third quarter of 2026 (growth of 28% to 35% year over year), which confirms the direction although it is not mechanically extrapolated over five years. Share repurchases are material (US$6,904 million over the last twelve months, on a market capitalization of US$155,700 million) and are reducing the share count in progress (from 2,150.5 million at the close of 2024 to 2,050.2 million in the most recent quarter): they are modeled with an explicit share path (`sharesPath`) that decays approximately 2.5% a year, rather than accumulating cash, following the criterion of real retention of the surplus. There is no dividend. Capex is minimal (0.6% of TTM revenue) because Uber does not own the vehicle fleet, so practically all reported capex is maintenance. The share path is the same in all three scenarios: the buyback rate comes from the sustained net reduction the company has already revealed (§6), which is one rate and not three, and the scenarios vary the speed of the business —growth, margin and exit multiple— and not the capital return policy. Making it scenario-dependent would widen the fan through a channel that is not the business: less buyback in the bear case makes it worse and more in the bull case makes it better, that is the concatenated conservatism of §2 applied in both directions at once.

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (the metric grows while EV stays roughly flat). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $137 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $72, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $137 in 5 years and a required return of 4.5% annually, the maximum to pay today is $110. Against the current market price ($72), the margin of safety is 35.0% (trades below the maximum → there is margin) and the total return at that price would be 13.9% annually.

• Entry multiple. The price of $72 implies 30× EV/NOPAT on the TTM, an elevated multiple that already pays for future growth.
• Forward multiple compression. The entry multiple compresses toward 12× in year 5 as NOPAT grows faster than the price.
• Estimated total return. The base case yields an annual total return of +14%, placing the stock at Undervalued.
• Margin of safety. The price trades It trades at a real discount to value, though short of the required margin of safety. against the value brought to today at the risk-free rate with a floor.
• Sensitivity to the exit multiple. The exit multiple moves within the marketplace band (18x-25x); outside that range, the value changes materially.
• Scenario dispersion. The adverse case yields a return close to zero, while the favorable case exceeds 20% annually, a wide range typical of a business still expanding margins.
• No dividend. All expected return comes from per-share value appreciation, not from a cash flow to the shareholder via dividend.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✓ ROIC exceeds the cost of capital (~10%)
• ✓ CFROIC backs up the ROIC (116%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• Cash generation. Free cash flow above US$10,000 million in the trailing twelve months, surpassing that threshold for the first time.
• Return on invested capital. Near 14.7%, above the 10% bar, in the good-to-excellent quality band.
• Cash conversion. Free cash flow exceeds net income adjusted for non-recurring items, a sign of earnings backed by cash.
• Reinvestment runway. Capex is minimal relative to revenue; the highest-impact reinvestment is technological and commercial, not physical capital.
• Working capital. The model collects from consumers before paying drivers and merchants, a favorable self-funding component.
• Stock-based compensation. Represents about 3.5% of TTM revenue, a moderate level for a technology platform of this size.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

Monthly active platform consumers (MAPCs) measured in the fourth quarter of each year, plus the second-quarter-2026 figure; trips and deliveries completed (Trips) and Gross Bookings on an annual basis, fiscal years 2024 and 2025. Gross bookings are the scale measure least distorted by accounting changes in revenue recognition.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Gross-bookings growth. Between 18% and 24% depending on the quarter, the least distorted measure of the platform's real scale.
• Reported revenue growth. Looks lower (16.7% TTM) because of the declared business-model change, not a real slowdown.
• Active-user growth. Monthly active platform consumers grew 16% year over year in the second quarter of 2026.
• Segment mix. Delivery grows faster than Mobility and gains relative weight within consolidated revenue.
• Freight. The freight segment contracts slightly on the weakness of the North American freight cycle.
• Growth optionalities. Advertising, Uber One and autonomous-vehicle aggregation are levers still early in their scaling.

• Capital-light intermediation model. Commission on gross bookings, without owning the fleet or the couriers.
• Recurrence of use. Mobility and Delivery are frequently used services in everyday urban life.
• Low switching costs. The filing itself acknowledges that consumers, drivers and merchants can switch platforms easily.
• Moderate pricing power. The company acknowledges it has lowered commissions and offered incentives in the past and could do so again in the face of competition.
• Demonstrated operating leverage. The operating margin quadrupled between 2023 and the TTM without structural changes to the model.
• Diversification of business lines. Three segments (Mobility, Delivery, Freight) with measurable cross-synergy between the first two.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• ✓Leverage (net debt / EBITDA)Net debt / EBITDA 1.0x
• ✓Interest coverage (EBIT / interest)14.0x
• –Liquidity (current ratio)no data
• ✓Cash quality (CFROIC vs ROIC)CFROIC backs 116% of ROIC
• !Value creation (ROIC − 10% bar)+5pp
• ✓Malinvestment test (capex vs incremental ROIC)Capex/D&A 0.4x — no over-investment
• ✓Float / working capitalFrees up cash $0.3 bn (float / negative WC)
• !Dilution (SBC % of revenue + shares)SBC 3.5% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Cash position. Cash and equivalents plus short-term investments of US$5,400 million at the close of the second quarter of 2026.
• Total debt. US$12,700 million in long- and short-term debt, moderate relative to free cash flow above US$10,000 million annually.
• Interest coverage. TTM EBIT amply covers the estimated interest expense for the period.
• Free cash flow generation. Surpassed US$10,000 million for the first time in the trailing twelve months, funding the buyback without leveraging up.
• Insurance reserves. Uber holds long- and short-term insurance reserves of more than US$13,000 million, an operating liability inherent to the mobility business.

How cash comes in and how it is deployed. In green, the business's own cash (the owner-FCF it generates and reinvests); in gray, the float and credit — customer and funding money, which is not the shareholder's.

Uber's capital allocation prioritizes share buybacks (84% of capital deployed in the trailing twelve months, nearly US$6,900 million), followed by smaller bolt-on acquisitions (12%, around US$1,300 million annualized) and minimal reinvestment in maintenance capex (4%, just US$308 million), a direct reflection of a model with no owned fleet. There is no dividend. The buyback is modeled with an explicit share-count reduction path in the year-by-year model, instead of accumulating cash, following the observed actual policy.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Track record of driving toward profitability. Dara Khosrowshahi led the turn from recurring losses toward positive margins and free cash flow since 2017.
• Alignment of interests. Directors and executive officers together own about 3.8% of shares, a moderate stake without majority control.
• Recent capital allocation. Prioritizes share buybacks funded with the company's own operating cash flow, without leveraging up to pay for them.
• Transparency about the business. The earnings release explicitly discloses the effect of the business-model change on revenue growth, rather than hiding it.

• Reported revenue growth looks artificially low because of a business-model change that subtracts 8 percentage points from the year-over-year comparison, while gross bookings keep growing between 18% and 24% depending on the quarter — the market punishes the revenue headline without looking at the detail the company itself discloses.
• Concern over the risk of drivers being reclassified as employees in multiple jurisdictions, a real risk with an uncertain and potentially gradual resolution.
• Fear that Waymo's and other operators' autonomous vehicles will displace Uber instead of operating on its platform, even though today Uber integrates several autonomous operators as partners.
• Broad-based sentiment correction toward consumer platforms.
• Recent history of accounting losses (accumulated deficit of US$10,600 million) that still weighs on perception, even though the business already generates free cash flow above US$10,000 million annually.

At market price, the estimated total return is +14% annually, placing the stock at Undervalued. The gap between reported revenue growth and gross-bookings growth is the most verifiable source of the discrepancy: it is an accounting effect declared by the company itself, not a real slowdown in demand.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at +2%/year (+12% total): the margin of safety protects the downside. The bull (+24%/year, +190% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Driver labor reclassification. Active litigation in the United States and recent adverse regulatory developments in Mexico and New Zealand could force a structural change in the cost model.
• Competition from autonomous vehicles with their own fleets. If Waymo or others deploy their own fleets outside the platform, Uber loses share in Mobility.
• Intense competition and low switching costs. Well-capitalized rivals in every business line, with low barriers to entry for the consumer.
• International exposure. Operations in more than 70 countries with currency, regulatory and geopolitical risk that varies by region.
• History of accounting losses. Accumulated deficit of US$10,600 million that, while not preventing operations, still weighs on market perception.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  A wide moat and ROIC 15% above the 10% bar, but the margin is limited (+35%) → excellent business at a fair price.

• Peter Lynch Growth at a reasonable price (GARP)

  A fast grower growing 12% at a multiple/growth of 2.5 → expensive for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Earnings yield 4% (EBIT/EV) + ROIC 15% → falls outside the Magic Formula.

• Howard Marks Perception vs reality + cycle

  The price discounts 4% vs our 12%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor +2%/yr, bull-scenario ceiling +24%/yr over 5y → capital protected, asymmetry in your favor.

• Pat Dorsey Moat strength (Five Rules)

  A wide moat, stable; sources: network effects, cost advantage, intangibles, switching costs, efficient scale → passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting 4%, within what we project (12%) — the story squares with the numbers.