Amazon , Uber The Stock Market

[steemychicken1]

AMAZON: THE MARKET KEEPS RALLYING 👀

The major U.S. indices continue hitting all-time highs, despite the fact that the situation surrounding the war still remains unresolved 📈

Both the S&P 500 and the Nasdaq just closed their 6th consecutive positive week 😯

This rally is being driven by two main factors👇🏽

First, corporate earnings continue to beat analysts’ expectations 👏🏽

Second, the semiconductor sector is on fire, as the market expects chip demand to remain extremely strong over the coming years 🔥

Either way, these short term moves play a relatively small role for long term investors like us, who are building our financial future over the next few decades.

One company that continues to stand out is Amazon.

Thanks to its massive logistics network, Amazon keeps expanding its reach and is now increasingly providing shipping services to third parties as well 😲

That means new revenue streams and higher profitability ✅

Last quarter, Amazon’s operating margin reached 12% for the first time ever 👏🏽

IF we assume that Amazon’s highest margin segments continue growing at the current pace, then it is not impossible to see operating margins approaching 20% by 2028 📝

Analysts now estimate that Amazon’s revenue could surpass $1 trillion by 2028 🤯

Based on that assumption, operating cash flow (OCF) could potentially reach $200 billion 🤑

For context, Google currently generates around $174 billion in operating cash flow and has a market capitalization close to $5 trillion 🙌🏽

Based on these numbers, is it really that unrealistic to think Amazon could surpass a $6 trillion market cap within the next two years?

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UBER: EXCELLENT RESULTS 👀

A few days ago, Uber reported very strong results 👇🏽

Gross Bookings: $53.7 billion (+25% YoY)

Revenue: $13.2 billion (+14% YoY)

GAAP Operating Income: $1.9 billion → RECORD HIGH (+57% YoY)

Non-GAAP EPS: $0.72 (+44% YoY)

Trips: 3.643 billion (+20% YoY)

Monthly Active Platform Consumers (MAPCs): 199 million (+17% YoY)

Free Cash Flow: $2.3 billion

Personally, I have rarely seen a more beautiful chart than Uber’s operating profit growth 🤌🏽

The only real observation is that, although Gross Bookings continue to rise, the take rate has declined significantly and now stands at 25% 🧐

In my opinion, the stock at $76 still looks undervalued because of investor fears surrounding autonomous vehicles (AVs) 🤷🏽‍♂️

What do you think about Uber as an investment?

Comments

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[tradfi-curator]

I am on the fence on Uber. I agree they look undervalued. If you do a DCF on UBER they appear to be undervalued.

I am not that concerned about the autonomous vehicles thing yet. Lot's of capital has gone into developing autonomous vehicles and it seems to have a lot of issues to do this day. Also it would be a very capital intensive venture for a company to buy a fleet of vehicles that do autonomous driving. I just doubt that will happen anytime "soon."

My main concerns with UBER are:

• UBER still needs to grow sales while already controlling 75% of the market share in the US. (It is very feasible that they will be viewed as a monopoly at some point in the future; this would work to Lyft's advantage).
• UBER needs to grow EBITDA margin. The most straight forward way for them to grow EBITDA margin is to increase their take rate. I just don't think increasing their take rate would be well received.
• UBER has been in a constant battle to not have their drivers considered employees in the US. If UBER drivers are considered employees in the US at some point in the future, it would redefine their business model in a significant way.

One reason I would be inclined to invest in UBER is they have a huge network of drivers. They can leverage that in a lot of creative ways. Just as an example, they could expand Uber Freight. The only problem is Uber Freight is not historically profitable and, in general, freight is a tough business.