Uber Technologies released its first-quarter earnings report on May 7. Here’s Morningstar’s take on Uber’s earnings and stock.

Key Morningstar metrics for Uber

  • Fair Value Estimate: $84.00
  • Morningstar Rating: ★★★
  • Economic Moat: Narrow
  • Morningstar Uncertainty Rating: Very High

What we thought of Uber’s Q1 earnings

Uber UBER announced that its first-quarter gross bookings narrowly beat management guidance, while net revenue slightly missed FactSet analyst expectations for the first time in five quarters. Adjusted EBITDA margin reached an all-time high of 16.2%.

Why it matters: We are seeing parallels between the convenience leaders in which growth moderates but remains strong, indicating top-of-class network effects.

  • Uber’s total trips, core user base, and engagement trends took a standard first-quarter seasonal dip, but these dips are smaller in consequence relative to previous years, thanks to the network’s critical mass that has accumulated over time.
  • Operating profitability and operating leverage continue to impress. Adjusted EBITDA grew 35% year over year, with all major cost line items trending downward as a percentage of net revenue thanks to the low marginal cost of servicing more customers.

The bottom line: We maintain our narrow moat rating and Very High Uncertainty Rating while raising our fair value estimate $79 per share to $84, largely due to a reduction in car insurance headwinds and an improving operating profitability outlook.

  • Uber’s platform now has 170 million users relative to DoorDash’s 42 million and Lyft’s 25 million. We believe this scale creates a robust moat, with a virtuous cycle in which strong demand depth reinforces supply stickiness which then encourages more demand depth.

Big picture: We believe Uber is the ideal partner within the autonomous vehicle supply chain, thanks to its ability to drive high utilization of vehicles.

  • Uber says the approximately 100 Waymo vehicles exclusively available on its application in Austin, Texas, are more productive than 99% of all drivers in the city.
  • Uber trades at around 4 times EV/revenue, well below DoorDash (around 6 times) but well above Lyft (around 1), highlighting how autonomous vehicle-related developments drive market expectations. Uber’s stock responds sharply to AV news.
  • DoorDash is less vulnerable to upstream OEM encroachment because food delivery logistics are far more complex. Additionally, food delivery AV hardware is far cheaper (robots or drones vs. LiDAR-equipped cars), lowering the incentive for OEMs to vertically integrate. As a result, DoorDash has a cleaner runway to thrive in an AV future.
  • While Waymo and Uber may continue negotiating profit-sharing terms, Uber is structurally advantaged by rideshare’s uneven demand curve (with peaks in the morning and evening), which makes it difficult for OEMs to justify fleet ownership. Uber’s hybrid human/AV supply model solves this challenge efficiently. Ultimately, the AV shift could benefit Uber’s bottom line, though likely at the expense of human drivers.

Fair Value Estimate for Uber Technologies

With its 3-star rating, we believe Uber’s stock is fairly valued compared with our long-term fair value estimate of $84 per share. We project that Uber’s revenue over the next five years will grow 14% annually, on average, consistent with our understanding of the nascent, but maturing, ridehail market.

To build our revenue, we developed a model that captures the dynamics of a fast-growing yet maturing technology while also factoring in the incremental adoption of autonomous vehicles (AVs). We forecast gradually decreasing year-over-year growth in gross bookings starting at 15% in 2025 and progressing downward to 9% in 2034 which approximately equates to 12 billion trips in 2025 and 30 billion trips in 2034. We believe Uber’s role as the premier demand aggregator in ridehailing and delivery position it well amid this potential technological inflection point in the industry. We also appreciate Uber’s transition from a high burn-rate startup to a profitable, cash-generating business.

Economic Moat Rating

Uber operates as a dynamic marketplace that we believe warrants a narrow moat rating based primarily on network effects. While other rivals also enjoy network effects, none have Uber’s scale, which provides Uber with a cost advantage in which fixed costs are spread across more trips. The firm also fosters unmatched engagement, which provides an intangible asset in the form of user data. This user data contributes to virtuous cycles where increased trips leads to more data and more data leads to improved application performance and improved application performance leads to more trips. The strength of Uber’s network effect is the critical determinant of its ability to maintain returns above its cost of capital over time.

Financial strength

As of March 2025, Uber had approximately $6 billion of cash and approximately $8.3 billion of debt on its balance sheet. The debt obligation includes a mix of senior unsecured notes, convertible notes, and refinanced term loans with staggered maturities extending as far as 2054.

There is a total of $2.9 billion in convertible debt that carries a low average rate of 0.74%. $1.15 billion of the convertible debt is due in 2025. As of September 2024, none of the conditions permitting holders of the 2025 convertible notes to convert the notes early had been met. The conversion rate is 12.37 shares per $1,000 in principal amount of notes, equivalent to a conversion price of $80.84 per share of common stock. We believe the rate profile reflects favorable terms that balance Uber’s cost of capital with shareholder dilution risks.

Uber burned $445 million in cash from operations in 2021. Since then, the firm has impressively transitioned to profitability, generating $642 million, $3.6 billion, and $7.1 billion in cash from operations in 2022, 2023, and 2024, respectively. Capital expenditures have averaged less than $250 million per year.

Risk and Uncertainty

We assign Uber a Very High Uncertainty Rating. The main uncertainty and cause of near-term volatility is the potential impact of AVs on the ridehailing industry. AV companies encroach on Uber’s value proposition by quickly rolling out the AVs while simultaneously designing an additional exclusive demand aggregation applications, effectively cutting Uber out.

These competitors understand that Uber profits by being the aggregator of demand. Often within networks, most of the spoils of a transaction flow to the aggregator thanks to ease of application use and zero marginal cost of adding new users. Even though Uber has a massive head start, an AV company with grand ambitions is incentivized to explore this application development avenue.

UBER Bulls say

  • Uber’s role as the premier ridehailing and delivery demand aggregator positions it as the perfect partner for autonomous vehicle companies looking to scale AV fleets and achieve high utilization rates.
  • Strong core user base growth reinforces Uber’s network effect, generating a virtuous cycle where more riders on the platform encourage more drivers to join the platform and vice versa.
  • Uber’s large user base provides rich data for further improvement to supply demand matching algorithms, enhancing its proprietary fleet management software and value proposition to AV companies

UBER Bears say

  • AV companies have a superior cost structure because AV companies do not need to pay drivers. AV companies will develop exclusive applications and effectively cut Uber out of the entire market.
  • Uber’s value proposition to AV companies is fragile and concentrated on lower-margin fleet management services like charging and cleaning.
  • Ridehailing is still a relatively new industry, which leaves plenty of room for increasing regulations. The mandatory classification of gig workers as full-time employees could compress margins and hurt the company

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