Alarm bells recently went off for Uber Technologies Inc. (NYSE:UBER) after videos showed Tesla Cybercabs hailing automatically. Bears say the Cybercab can eat into Uber’s market share, and reports suggest Tesla (NASDAQ:TSLA) driverless rides come in cheaper than Uber rides. The stock recently saw key insider buying and selling activity that you should not miss.
Filings showed CEO Dara Khosrowshahi bought 141,000 shares recently at prices between $70.73 and $71.18. President and COO Andrew Macdonald bought 70,000 shares on September 4 in two blocks priced at $75.65 and $76.44, lifting his holding to about 426,000 shares.
However, UBER also saw some insider selling activity. Chief Corporate Officer Jill Hazelbaker sold 28,170 shares at $71.31 each earlier this month.
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The bull case
Uber’s moat comes from solving a coordination problem that is expensive to rebuild. Riders want a car nearby within minutes, drivers want enough paying trips to make the shift worth it, and Uber matches the two across cities and time slots. A new app faces a cold-start problem because it needs riders to attract drivers and drivers to attract riders at the same time. Uber already has both sides at global scale.
Uber is a demand aggregator that can plug in anyone’s self-driving fleet, and management said on the last call that robotaxis are live in 7 cities with 15 targeted by year-end and more in 2027. Uber has already launched driverless service in London with Wayve, and it works with Waymo, Rivian, Lucid–Nuro, Pony.ai and WeRide.
Photo by Zhuo Cheng you on Unsplash
The bear case
The risk is that Uber’s suppliers change from millions of individual drivers into a handful of large companies. Tesla (TSLA) has opened an interest form for Cybercab fleet buyers and runs its own robotaxi app, which gives it a direct line to customers without paying Uber a cut. If Tesla prices rides below Uber, Uber either drops prices and loses drivers, or absorbs the cut and hands the pain to shareholders. Bears argue the AV partnerships will not protect margins once the technology suppliers gain bargaining power.
Valuation
Uber Technologies, Inc. trades at a forward non-GAAP P/E of 21.17, which is 6.65% above the sector median of 19.85 but 29.08% below its own five-year average of 29.85. On a trailing GAAP earnings basis, the stock is at 15.51 times against a sector median of 25.38, or 38.89% cheaper.
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