Why Uber is One of the Best Compounders Hiding in Plain Sight

Those close to me know how bullish I am on Uber as a stock going forward. I believe Uber is a great stock to own because it’s a high-quality business — strong moat, high-teens revenue growth, exceptional earnings growth, very impressive management, and a reasonable valuation trading at a discount to intrinsic value.

Today, I want to briefly share my thesis for investing in Uber. I may follow it up with a deeper dive later, but felt it was important to first get my core views out.

P.S. - This is not investment advice.

Uber Investment Thesis

Uber is the world’s largest platform for on-demand mobility, delivery, and logistics. It operates across 70+ countries and serves over 170 million users monthly. In 2024, Uber generated $162.8 billion in Gross Bookings and $40.3 billion in revenue. Its business spans three segments: Mobility (58% of 2024 revenue), Delivery (35%), and Freight (7%). Mobility remains the primary cash engine, while Delivery is evolving into a high-frequency, sticky service with strong cross-sell potential. Uber’s current market cap is $162 billion, with Gross Bookings growing 18% year-over-year and EBITDA growing 83% year-over-year in 2024.

Here’s why I believe Uber is a great company to own for the next 3–5 years:

• Market-leading position with a wide moat
  Uber is operational in over 70 countries and holds either the #1 or #2 position in virtually every market. In the U.S., Uber controls approximately 74% of the rideshare market. Having worked at Swiggy, I have seen firsthand how hyperlocal fleet liquidity and operational advantages build barriers that are nearly impossible for new entrants to overcome once scale is achieved. For a competitor to challenge Uber, they must replicate operations city-by-city, zipcode-by-zipcode — a massively difficult task. Think of it as "guerrilla defense" executed at scale.

• High revenue growth and underpenetrated markets
  Despite its size, Uber is still early in capturing its full opportunity. In 2024, Gross Bookings grew 18% and Total Revenue grew 19%. Management estimates the U.S. Mobility market alone at over $1 trillion and severely underpenetrated. Over the next five years, I expect Uber's revenue to grow at low-to-mid-teens percentages annually, with EBITDA compounding at approximately 25% CAGR. Gross Bookings could grow by 2.3x, driven by international expansion, Uber One membership growth, and increased penetration into adjacent categories like grocery delivery, convenience, and advertising.

• Fixed cost base driving operating leverage
  Uber’s platform has a largely fixed cost structure, which allows incremental Gross Bookings to drive outsized profit growth. In 2024, Uber delivered $3.5 billion in GAAP EBITDA and $6.5 billion in Adjusted EBITDA. As volumes scale, I expect operating margins to expand meaningfully — potentially tripling from ~6% today to ~18% by 2030 — dramatically improving the company's profitability profile.

• High cash flow generation
  2024 marked a clear inflection point for Uber’s cash generation. The company produced $6.9 billion in free cash flow, representing ~16% of revenue. Going forward, I expect free cash flow to grow at over 20% annually. This provides Uber significant flexibility to reinvest in the business, pursue buybacks, or return capital to shareholders without external financing needs.

• The AV risk is overblown
  Autonomous vehicles have long been framed as an existential threat to Uber. I see it differently. First, it will be extremely challenging for AV players like Waymo or Tesla to independently operate rideshare businesses at scale. They would need to acquire and retain customers city-by-city while building sufficient fleet density — operationally a much harder problem than technology alone. Second, Uber’s management is rightly pursuing a partnership model, where AV players integrate into Uber’s network instead of competing with it. Third, even under aggressive AV adoption scenarios, the impact on Uber’s North American Mobility business is projected to be less than 1% of Gross Bookings by 2026. Lastly, if AV supply grows, Uber benefits: more vehicle availability would reduce cost per mile for ridesharing customers, unlocking new demand segments and driving market expansion. Wouldn’t you start using Uber more if your trips were cheaper?

---

Valuation and Holding Period

At around $77 per share, Uber today trades at 28.6x 2025 projected GAAP earnings.
By 2029, I expect Uber to deliver $7.48 in GAAP EPS. Applying a reasonable 22x multiple implies a five-year price target of $165 — roughly 114% total return and an IRR of 16.5%.

My purchase price averaged ~$70, so the investment is already up 10%. I intend to hold Uber for the next 3-5 years, tracking the business closely and changing course in case there is a dramatic shift in the market.