Why Bill Ackman is correct in purchasing $2.5B worth of $UBER 👇

1. $Tesla Motors(TSLA)$ Robotaxi Bear Case Debunked

People say $Uber(UBER)$ is competing against $TSLA. That's wrong. $UBER is not an AV manufacturer.

Is $Amazon.com(AMZN)$ e-commerce going out of business because merchants can sell directly to consumers? Of course not.

AV manufactures will need $UBER's 170M monthly active users will to fill the demand. Plus, the AV manufactures will not have to worry about pricing, route optimization, daily operations, fraud, lost items, and so much more that comes into running a ride hailing platform.

Long $TSLA and long $UBER. If they partner, even better.

2. Competitive Advantage

The $Uber(UBER)$ moat is huge. There is no competitor in the market with a product range like $UBER with mobility and delivery which means customer acquisition is cheaper and LTV is higher. This is all combined through the $UBER One membership.

3. Last Mile Logistics

There's a $200B last mile logistics opportunity. $Uber(UBER)$ should be able to disrupt the likes of $UPS, FedEx, and DHL because the data, and route optimization technology they have is far superior.

Customer expectations are slowly becoming same day delivery as the e-commerce boom continues. This is why the likes of $AMZN and $UBER will take over logistics.

4. Rural Opportunity

Currently the average $Uber(UBER)$ ride is $20-30 which are generally short city rides.

The big opportunity is in the rural areas with longer journeys but the difficulty is building out supply in those areas.

Longer rides lead to less "dead time" between drop off and pick up, less traffic, and less operational strain of payment process and customer support.

5. Financials

Compared to competitors, $Uber(UBER)$ is by far the most profitable meaning they have the flexibility to price out competitors.

Further, $UBER had revenue growth of 22% and EBITDA growth of 55%. Just 18 months ago, $UBER had negative EBITDA.

6. Valuation

$UBER could hit $15B in FCF within 4 years which would be 23% CAGR.

This FCF growth should translate into at least a 30x multiple, which would still be far below historic FCF multiple lows.

$15B in FCF with 30x multiple gives you a $450B company excluding equity investments like $GRAB for example.