UBER Forensic Analysis

PART 1: TRADING EXECUTION

1. Trading Setup & Entry Strategy

Current Status: ⚠️ WAIT / STALK (Technicals are broken, Fundamentals are strong) Trend: Correction in progress. Price ($82.09) is below both the 50-day ($88.50) and 200-day ($87.97) SMAs.

• •The Setup: UBER is currently a "falling knife" technically, despite robust fundamentals. The price has lost the 200-day SMA support. We are looking for an asymmetric entry near the Lower Bollinger Band or a reclaim of the 200-day SMA.
• •Entry Zones:
  1. •Aggressive Value Entry: Buy 40% position at $75.50 - $76.25 (Lower Bollinger Band & Structural Support). Look for RSI divergence here.
  2. •Momentum Reclaim: Buy 60% position ONLY on a daily close above $88.50 (Reclaiming the 50DMA/200DMA confluence).
• •Stop Loss:
  • •For Value Entry: Hard stop at $71.80 (Break of macro structure).
  • •Reasoning: If $72 breaks, the trend has fully reversed to bearish on weekly timeframes.
• •Target: First trim at $88 (resistance), extended target $105 (new highs).
• •Risk/Reward: 1:3.5 at the $75.50 entry.

2. Executive Summary

Thesis: UBER is fundamentally firing on all cylinders (20% revenue growth, massive buybacks), but the stock is undergoing a technical correction following a broader market rotation. The Q3 2025 Net Income of $6.6B is heavily distorted by a one-time tax allowance release ($4.9B) and investment mark-ups; core operating leverage remains the real story. With a $20B buyback authorization protecting the downside, this pullback is a buying opportunity, but patience is required to avoid catching the falling knife.

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PART 2: DETAILED RESEARCH

3. Recent Material Events (8-K Analysis)

• •Buyback Authorization (July 2025): Board authorized an additional $20.0B share repurchase program. This is a massive backstop for the stock price.
• •Debt Redemption (Sept 2025): Redeemed $1.2B of 2027/2028 notes. This deleveraging reduces interest expense volatility, though cash was used.
• •M&A Activity (June 2025): Closed acquisition of Trendyol Go (Turkey delivery) for ~$697M. Shows continued aggressive international expansion.

4. Insider Trading Activity

• •COO Sale Plan: Andrew Macdonald (COO) entered a 10b5-1 plan on Sept 8, 2025, to sell up to 125,000 shares starting Dec 24, 2025. This explains some recent selling pressure and is a minor short-term headwind.
• •Signal: Neutral/Slight Bearish. Executive selling into a correction is rarely inspiring, but it is pre-planned.

5. Current News & Market Context

• •Robotaxi Narrative: The market is currently obsessed with AVs. News regarding expansion in UAE and potential partnerships with Waymo/Tesla are critical catalysts. The market views UBER as the essential "network layer" for AVs.
• •M&A Rumors: Chatter regarding acquisition of SpotHero (parking) suggests vertical integration into the "start-to-finish" journey.
• •Macro: Consumer discretionary stocks are retreating (Dec 31 sector update), creating the current headwind. UBER is being dragged down by sector rotation rather than specific company failure.

6. Business Model Analysis

• •Pricing Power: Mobility Revenue grew 20% while Gross Bookings grew 20% (currency constant). Take rates are stable.
• •Revenue Mix: Delivery grew 29% (outpacing Mobility at 20%). The diversification is working; Delivery is no longer just a "pandemic trade."

7. Financial Health

• •Cash Position: $9.1B in unrestricted cash/investments vs $11.8B debt. Healthy liquidity.
• •Operating Leverage: Revenue +20% YoY, but Adjusted EBITDA +33% YoY ($2.25B).
• •Cash Flow: TTM Free Cash Flow is robust at ~$7.0B (calculated). The business is a cash machine.

8. Valuation Analysis

• •Market Cap: ~$171B (at $82/share).
• •Reverse DCF: At $82, the market implies ~14% growth for the next 5 years. Given UBER is currently growing at 20%+, the stock is undervalued relative to growth, likely due to the current technical breakdown.
• •Forensic Adjustments: Real Operating Income is $1.1B, not the $6.6B Net Income reported (see Forensics section).

9. Competitive Position

• •Dominance: Strong moat in Mobility. Delivery continues to gain share. The "Super App" strategy is reducing acquisition costs (CAC) per user.
• •Threat: Autonomous Vehicles (Tesla/Waymo) remain the existential threat, though UBER is successfully pivoting to be their partner, not their victim.

10. Management Quality

• •Dara Khosrowshahi: Execution has been disciplined. The focus on GAAP profitability and buybacks ($4.6B repurchased YTD) demonstrates shareholder alignment.

11. Risk Factors

• •Regulatory: Ongoing worker classification battles (Mexico, Massachusetts). This is a perpetual overhang.
• •Economic Sensitivity: A consumer recession would hit Mobility and Delivery volumes immediately.

12. Forensic Accounting Flags

• •⚠️ Earnings Distortion: Q3 Net Income of $6.6B includes a $4.9B non-cash tax benefit (release of valuation allowance) and $1.5B in unrealized investment gains (Didi/Grab). DO NOT use P/E ratios based on this number. Core profitability is much lower (approx $1.1B Operating Income).
• •⚠️ SBC Intensity: Stock-Based Compensation was $465M in Q3. While high, it is stable relative to revenue growth.

13. Technical Analysis & Trade Timing

• •Trend: BEARISH_CROSSING. The price is below the 50 and 200 SMAs. The 50SMA ($88.50) is converging toward the 200SMA ($87.97)—a potential "Death Cross" is forming.
• •RSI: 40.55 (Neutral). Momentum is bearish but not yet oversold. We prefer to buy when RSI < 30 in a bull market, or on a confirmed reversal.
• •Bollinger Bands: Price is approaching the lower band ($75.35). This level often acts as a dynamic floor during corrections.
• •Reconciliation: Fundamentals say BUY, Technicals say DOWNTREND. Rule #1 applies: Do not short, but wait for the floor.

14. Short-Term Trading Strategy (2-5 Days)

• •Timeframe: SWING_2_5_DAYS
• •Setup: Counter-trend bounce play.
• •Scaling: Enter 30% if price taps $79.50 (psychological support). Add 70% if price flushes to $76.00.
• •Take Profit: Aggressively trim at $84.50 (10-Day SMA).
• •Stop: Hard stop below $74.50.
• •Rationale: The stock is oversold relative to the 20-day mean (-6.26% in 20 days). A mean-reversion snapback is likely before the downtrend resumes or stabilizes.

15. Catalysts & Timeline

• •Dec 2025/Jan 2026: COO Stock Sales (Headwind).
• •Early Feb 2026: Q4 Earnings. Likely to beat expectations given the buyback support and ad revenue growth.
• •Consumer Electronics Show (CES) Jan 2026: Potential AV partnership announcements.

18. Investment Recommendation

RATING: HOLD / ACCUMULATE ON WEAKNESS

Conviction: 7/10. The long-term thesis is intact, backed by a fortress balance sheet and a $20B buyback program. However, the current technical breakdown requires discipline. Do not catch the falling knife at $82. Wait for the flush to $75-$76 or a reclaim of the 200SMA ($88).

One-Liner Thesis: UBER is a cash-flow compounder disguised by a noisy income statement; use the current technical correction to accumulate shares near $75, leveraging the $20B buyback floor.