Ca$htag$: Uber Technologies (UBER) Partners with Rivian (RIVN)

0:00Welcome back to Fast Market on the Schwab Network. I'm Diane Kinghall, alongside Tom White and our Chicago studio. Time now for our cash check segment for that. We want to bring in our next guest and that's Landon Swan. Co-founder of Lake Folio, taking a look at Uber today. Landon's good to see you happy pre-Fri day. Let's get into it with Uber. So the shares have underperformed the broader market year to year. It's got some news out today with a partnership with Rivian that is pushing forward. It's planned with Autonomous Vehicles. You've got new sentiment data that looks at Uber, not just with regard to vehicles, but Uber eats as well. Take us through the latest data you have. Yeah, so, you know, Uber's, it's been kind of a rough year for them. I mean, they were about where they are now a year ago. They kind of had a rounded top and, you know, the last earnings report was a little disappointing, but they've bounced back now. I think they're what mid to high 70s. So, you know, it's been kind of a boring ride for investors, a little disappointing. And when we look at the social media, what people are talking about, what's

1:01interesting is, you know, people, they still talk about using Uber and using Uber eats, but a lot of the social chatter is around, you know, the rates that you're paying, what the labor disputes are, unionization, the fairness of the business practices. There's a lot of debate out there about that, which is interesting in light of, you know, the Autonomous Vehicles kind of around the corner. All of that's kind of end overnight pretty much. And when we look at, you know, how well they're doing, it's, you know, it's Uber eats really carrying the load when it comes to, you know, improving performance. And that's what we saw on their last quarterly report. I mean, the delivery aspect of things is about a third of the revenue, it grew 30% whereas mobility is almost two thirds and it grew 19%. You can kind of see here on the chart, you know, lift is growing. It was weaker. Again, this is one of those lowered denominator from a year ago kind of situation. So put an asterisk next to that. But Uber itself is not, you know, resonating as well as far as high growth on our, on our data

2:04begin. Again, that's mostly because people have not talking as much about it as enthusiastically about it. I think it's the novelty of it's worn off. People are still using it at a time. They're just not talking about like they used to, but I think that they're talking about delivery. And that's where we see a lot of the growth. But as you can see from this chart, it's, you know, Uber eats is not the dominant player. It's door dash at plus 55% and that's off of a high denominator. So they've been growing very strongly for quite some time. And so, you know, when you look at overall how they're doing, I think, I think obviously the question is how are they going to handle autonomous? They kind of, you know, they dip their toe into the potential of building their own vehicles and they, you know, change their mind pretty quickly on that and now it's all about partnerships like you talked about that asset light model, which I think is the smart play. They've got to lean into what they've gotten and what they've got is distribution. Everybody uses Uber. Everybody's got it. And so we'll see how that plays out. You guys know that I'm a pretty big Tesla fan. And

3:07I think they're going to be pretty disruptive overall. But, you know, I think it's, it's, you got to look at how that's going to play out on autonomous vehicles. I'm a little bit more on the bearish side for Uber. I think that even though they are the dominant player, they own distribution. I think that they can be upset very easily with technology. And I know that they're doing all that they can partnership wise. I just think that there's going to be some pretty big competition coming in. But their numbers are going to get a lot more attractive. Marges are going to go through the roof if they can figure out a solution to driverless cars, for sure. Okay, Landon. I'm going to give you a couple scenarios here because Uber obviously has the best technology as far as a platform for maybe autonomous vehicles to use in the future, right? So maybe Tesla comes out with and starts up ramping up production of their, you know, cyber cab, but they need an outlet for people to use it. And what's the outlet that everybody

4:07uses while it's Uber or Lyft, right? So if you look at it based on what Spotify has, right? You can play music on Amazon and Apple. Spotify has the best, you know, net, right? You look at the streaming. Netflix has the best streaming service because maybe they've got the best algorithm within their platform. Does that kind of sway you a little bit, especially with that other chart that you have where, hey, the stocks down 26% from it's all time highs, you know, in the fall. And maybe it's cheap right now because their growth numbers are still there. Yeah, yes and no. So I think that they're likely undervalued. If you could take autonomous driving out of the equation, I think I would definitely say they're very undervalued and I think I'd be a buyer here. I think it gets questionable once you enter that into the conversation because there's so much grayery. We don't know which way this is going to go. And yes, they have fantastic technology. And it's really about the distribution. It's not the technology itself. I don't think it

5:08would be difficult to replicate the technology. It's the number of users and the number of drivers really that make it so valuable. And that's the key. If you can get someone else to start to put a crack in that and the way they would do that is with a better service. I mean, you can go back and distribution is king for sure. But I mean, Blockbuster had distribution and Netflix came out with a better technology. Internet Explorer had distribution and Chrome was a better technology. Yahoo! Search had distribution and Google came out with a better technology. There are, you know, tons of examples where the best distribution sometimes doesn't win, especially in tech. Like a company like Walmart, for example, that is much more difficult to upset their distribution because you can't just build a great app and get tons of people on it and all of a sudden you beat Walmart. They have physical stores everywhere. Uber is just, you know, they're an asset light model. And so it's possible that a company like Tesla could come in and completely disrupt them, especially if

6:09the launch of autonomous driving, if Tesla is able to deliver on what the promises are and Uber isn't, then the price differential is going to be incredible because you're still going to have drivers on Uber. And so they have to pay a lot more for the services. Whereas with Tesla, it could be lower. That's, I think, the biggest threat is if at the time when the cyber cab, cyber cab, cyber taxi goes live, if Uber's not ready, then the price differential is going to be so massive, I think Uber's going to have to cut, get, you know, crush their margins in order to stay competitive so that people don't just flock over. They've got to defend that distribution. It's kind of a technology race at this point. But they're doing all they can with partnerships. I've just, you know, I don't like who they're up against as far as, you know, I like who they're up against. I just don't like that they're up against them for Uber's sake, I should say. So, um, Landon, I hear what you're saying about the disruption for Tesla. But obviously that's not on this chart, right? In the comparison, you've got DoorDash, et cetera, on this. And then, you know, when you think about just the actual moving of people, it's a lip. And then when you look

7:12at the charts, you know, and maybe it's an entry point for DoorDash on a year-to-date basis, it's way worse than Uber is on a year-to-date basis for DoorDash. And on a year-over-year basis, same thing, you know. Even if you look at long-term, when these companies both made their public debut to now, Uber has outperformed DoorDash by a mile, you know. So, is the view that DoorDash's trajectory from here at risk? Like, what is, excuse me, the Uber's trajectory from here at risk? What is DoorDash doing right right now? Or is this just temporary, Landon? You know, I'd probably be more of a buyer of DoorDash here than I would be of Uber, just based on our data. It's extremely strong on the delivery side of things. Obviously, we saw that chart earlier. DoorDash is far more attractive as an investment. In Uber, again, it is an attractive investment if you can, you know, answer the question about technology in the future. I can't answer that. But I think that they're oversold,

8:15just as a general delivery and moving people company. That side of things, they're definitely oversold. I think that they're undervalued right now. DoorDash, I like a lot based on our data. I think it is oversold significantly. But again, all of this is going to be disrupted significantly. So, we're going to have to see how that plays out. You know, one of the things that Uber has, again, I'm going to hit on this distribution because it is so important that they defend that. They've got a monster, monster lead when it comes to distribution through their technology and through the number of drivers that they have. If you look at people who, what they call CROSS platform users, they spend about three times as much. So, that's people who use Uber Eats and use it for ride sharing. They spend three times as much and they retain as a member 35 percent more. So, this sort of flywheel network effect of getting you in the ecosystem, very similar to what Apple has perfected. Uber is trying to make that better and better. If they can get you just

9:15as a habit saying, you know, I'm an Uber user. I'm hungry. I'll get Uber Eats. I need to go somewhere. I'll hail an Uber. I think that's really the key for them is just to hold onto this distribution. And, you know, they've got a partner with everybody that they can in order to have the, to be first in driver list because once that happens, you know, their margins, I think, are at 8 percent right now. Once that happens, margins go through the roof or prices come down and it becomes a no brain or one of the others going to happen. And it's a race to see who can have driver list cars. And if they win, then they're going to win for sure. But if they don't win, then they're going to be, there's going to be a period of time where they're competing on price, taking losses in order to hold onto that market share while the technology catches up. So, it's going to be very interesting. But in the end, the consumer is definitely going to win. All these prices are going to come down. We're going to have huge deflation in when it comes to food delivery and mobility, for sure. All right, Lennon, we'll leave it there. That's Lennon Swan co-founder of Lake Folio.