TIVP016: UBER (UBER): CASH BURNER TO COMPOUNDER?

SHAWN O’MALLEY AND DANIEL MAHNCKE

20 April 2025

Shawn O’Malley and Daniel Mahncke break down Uber (ticker: UBER), a ubiquitous tech giant that has changed how the world travels. Uber became profitable annually for the first time in 2023, and as its user growth accelerates, the company appears to be achieving modest economies of scale, making it an increasingly attractive business.

In this episode, you’ll learn how Uber has scaled across the world and invested in competitors in areas it couldn’t win, why Uber isn’t as negatively exposed to autonomous vehicles as you might think, and why Bill Ackman invested in the company, plus so much more!

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IN THIS EPISODE, YOU’LL LEARN:

  • Uber’s playbook for global growth.
  • Why Uber has invested in so many competitors.
  • How Uber can actually benefit from autonomous vehicles.
  • What it has taken for Uber to finally turn profitable.
  • How regulatory risks are affecting the company.
  • Why Bill Ackman invested billions in Uber.
  • Why international growth is more profitable than U.S. growth for Uber.
  • What is Uber’s intrinsic value per share.
  • Whether Shawn & Daniel add UBER to The Intrinsic Value Portfolio.
  • And much, much more!

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Shawn O’Malley: The beauty of Uber’s model is that the vehicles are not on their balance sheet, and drivers can opt to make themselves available in response to demand in real time. Thus, Uber drivers can be incredibly flexible about responding to ride requests and a lack thereof. Another way to maybe say that is that supply on Uber’s platform naturally adjusts to demand and for, say, Waymo, to try and allocate X, Y, Z number of cars through a city that will displace Uber.

[00:00:27] Shawn O’Malley: Well, the reality is that they’re either going to under allocate vehicles or over allocate them at any given moment in time. There’s just no way to perfectly match demand with a fixed supply of vehicles driving around, which is why it’s better to deploy a more limited fleet and just partner with Uber tapping into their network for bookings, and then the vehicles could be used for other purposes or as just an occasional alternative to a regular Uber.

[00:00:55] Daniel Mahncke: So today’s episode is on the mobility giant Uber, a company whose name is synonymous with its service, which is always a good thing, as we’ve seen with Airbnb and Google too. I’ve always questioned how Uber could make the economics of its business work. I felt either the drivers, users, or shareholders would win at the expense of the other, and I struggle to see how they could balance all three interests.

[00:01:22] Daniel Mahncke: It seems very difficult to price rights cheaply enough so as to continue attracting rider, while also charging enough to fairly compensate drivers in a sustainable way and still leaving enough meat on the bone for the corporation behind Uber to generate sizable profits from fees. Even as I say it now, I am amazed that they have find a way to make it work, but they really have.

[00:01:47] Daniel Mahncke: As we’ll explore in this episode that core business only seems to be accelerating as the company expands into tangential areas too. But with that, let me introduce my cohost, Shawn O’Malley, who will be making the pitch for Uber today, and I will just be sharing feedback and questions along the way. And at the end we will make a decision on whether to add Uber to our intrinsic value portfolio of stocks we are building week in, week out on this show.

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