Skip to Content
Stock Analyst Update

Uber’s Delivery Network Effect Continues to Strengthen

We continue to be impressed with the gradual improvement in the mobility business and are raising our fair value estimate.


While Uber Technologies (UBER) posted mixed third-quarter results, we continue to be impressed with growth in the firm’s delivery segment and a gradual improvement in the mobility business. We are increasing our fair value estimate to $51 (from $48) as we have assumed stronger delivery revenue growth in 2021 and beyond, driven by long-term changes in consumer behavior toward more online food delivery and pickups. Additionally, we expect the firm to further accelerate partnerships with more restaurants, increasing the supply side of what appears to be a strengthening network effect. We lowered our projections for the firm’s mobility segment a bit as the recent surge in coronavirus cases in Europe and North America has created more uncertainty. While the stock has nearly tripled from March lows, we believe its current 21% upside (based on our fair value estimate) remains attractive.

Uber reported total gross bookings of $14.7 billion, down 10% from last year as the 134% growth in deliveries was more than offset by the 53% decline in mobility. Demand for Uber’s services did jump impressively from the previous quarter as economies in various markets opened in the third quarter. Mobility and delivery gross bookings were up 94% and 23% from the second quarter, respectively. While the decline in gross bookings from last year drove total adjusted net revenue down 20% year over year, revenue increased 47% sequentially. The adjusted take rate inched up by 30 basis points to 19.1% from last quarter but was down more than two percentage points from last year as the lower take-rate delivery segment represented a bigger chunk of total bookings (58% compared with last year’s mere 29%). Higher year-over-year driver incentives due to the short-term shortage of drivers (as Uber’s mobility is improving a bit), also contributed to the adjusted take-rate decline.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Ali Mogharabi does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.