Communications

A counter cyclical bet in a weakening macroeconomic backdrop - UBER’s uniqueness stems from its multi-product platform which ensures higher utilisation and earnings potential for drivers. A strong supply-side leads to lower wait times and cost for customers which are the two most important variables for customer stickiness. The barrier to entry is increasing for competition as UBER’s moat continues to widen driven by its scale and network. The company reported a blowout Q4 whereas competitor Lyft struggled. The stock could compound at ~17% over 5-7 years with a 30% upside over 12-18 months as UBER achieves GAAP profitability in 2023.

Communications

Report by Gordon Haskett Research Advisors

Upgrades to Buy - combination of multiple catalysts and overly negative sentiment creates a favourable risk:reward dynamic - 1) Improving driver supply (GHRA’s proprietary data shows positive performance in wait times). 2) Improving conversion rates (highest in several years). 3) Continued shared ride adoption. 4) Employees are returning to offices (Sept was a turning point). 5) Lyft Media is an underappreciated and potentially high margin business segment. GHRA also highlights the valuation gap with Uber (70% discount is unjustified) and why LYFT is increasingly looking like a prime activist target.

Report by New Constructs

26 out of New Constructs’ 32 ideas outperformed in 1H22 with an average return of -50% compared to a 19% decline for the S&P 500. Underscoring just how important reliable fundamental research is in turbulent markets, their model portfolio has beaten the S&P by an even wider margin (48%) since the start of 2021. Top performers have been Coinbase, Carvana, Peloton, Snap, Beyond Meat and Lyft. As we enter 2H22 high conviction shorts include Netflix, Uber, Shopify and Robinhood.