The Intrinsic Value Podcast - The Investor’s Podcast Network TIVP016: Uber (UBER): Cash Burner To Compounder? w/ Shawn O’Malley & Daniel Mahncke
Apr 20, 2025
Shawn O’Malley and Daniel Mahnke dive into Uber's transformation from a cash-burning giant to a profitable powerhouse in 2023. They explore its global growth strategies, revealing why international markets outpace U.S. profitability. The duo discusses Uber's competitive tactics against Lyft and the implications of investing in rivals. Listeners will learn how autonomous vehicles may actually benefit Uber and why notable investors like Bill Ackman have placed big bets on the company. The analysis also touches on regulatory challenges and Uber's innovative ventures like Uber Eats.
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Uber's Flexible Supply Model
- Uber's model avoids owning vehicles, letting drivers flexibly adjust to demand in real time.
- Fixed vehicle supply like Waymo's can't perfectly match dynamic ride demand, making Uber's model more efficient.
Uber's Variable Cost Structure
- Uber's main businesses are mobility, Uber Eats (delivery), and Uber Freight (logistics).
- Its costs are mostly variable, scaling with demand, insulating Uber from losses during downturns.
Uber's Profit Margins Constraints
- Uber's growth means more drivers and costs, limiting operating profit margins.
- Despite this, Uber's profitability is improving with modest economies of scale, reaching 6% operating margin.