r/valueinvesting
UBER IS A VALUE TRAP JUST LIKE PAYPAL AND ADOBE
Argues UBER is a value trap similar to PYPL and ADBE, questioning if low metrics reflect true value or fading growth despite Ackman's stake.
- Traditional cheap valuation metrics may be misleading if the market no longer believes in the long-term growth story.
- Historical parallels with PayPal and Adobe suggest that 'cheap' stocks can continue to decline as growth expectations reset.
- Reliance on prominent investors like Bill Ackman does not guarantee success, as even top investors can misjudge value traps.
maybe i’m wrong, but uber is starting to feel like a value trap to me. the stock looks “cheap” on traditional metrics, people point to improving profitability, and now bill ackman has a major position, which automatically makes everyone assume it’s a can’t-miss investment.
but we’ve seen this story before. paypal looked cheap. adobe looked cheap. both kept getting cheaper because the market stopped believing the growth story.
i don’t care how much bill ackman is invested. even the best investors get things wrong. what matters is whether uber can sustain growth, defend margins, and prove that today’s valuation is actually attractive instead of just looking cheap on paper.
genuine question for the uber bulls here: what makes this different from other stocks that looked undervalued but turned out to be classic value traps?
You’re throwing around the word monopoly quite loosely
This.
I'm not even an Uber bull because the price only matters in terms of what intrinsic value I calculate vs todays quoted price .... Which at best slightly undervalued....
I am a PayPal bull at 44 (it's 41ish so yes I'm down) regardless of the fact that it's hated... And the stock never goes up .. the value is amazing
Genuinely why?
Haven't looked into PayPal but as a consumer I don't really see what it adds. And I assume there's no real moat and market share will constantly be eroded as different payment service providers and epayment options continually come onto the market (Stripe, Apple / Google Pay, etc).
I just don't see it as a long term / value play. It seems like a dinosaur company that tbh I'm surprised is still alive. Same as Amex, though clearly I'm missing something there too.
But happy to hear alternative views.
tpv is growing. venmo is increasingly monetized and will continue to be so. paypal is the largest platform-agnostic wallet and that's a fine niche even if it ends up smaller than apple pay or google wallet\*
\*which if google ever made a wallet they'd just deprecate after 10 years anyway.
I'm glad you brought up axp, considered a good company.
Moat is a number between 1 (asml) and 0 (cal maine eggs), and it's runs half the world's online processing. Venmo growing. PayPal itself cash cowing..
But really it's about the 15 percent buybacks a year. You should study what happens to share cannibals, nvr Azo, even aapl to a certain extent.
Personally I think it's because autonomous vehicles aren't really part of the big AI story dominating equity markets. It got rerated by the market about 4 months ago and it's not going anywhere until a catalyst occurs in either direction, almost certainly related to autonomous vehicle adoption.
Adobe and PayPal are very different stories from Uber, and different from each other, and perspectives on those equities have little bearing on Uber's future performance.
They definitely have a duopoly on rideshare with Lyft where I’m from. A duopoly is far from a monopoly, though, and if Google or Amazon decide to make their own apps, all of a sudden it’s an oligopoly
That’s a big if. Almost like saying if martians came to earth and gave everyone jet packs all of a sudden the company is worthless.
Uber is growing, useful, margins are good, and despite the Jetson’s self-driving car theory, the amount of back end surge dynamics at play to make the right car available at the right place in time takes a shot ton of data. Data only uber and Google has with its google maps, Lyft will get left behind while the new duopoly will become waymo/uber.
To be a value trap, you have to be a value stock...
AI capitalizes.
Always remember: WSB is full of idiots pretending to be regarded. ValueInvesting is full of idiots who think they're smart.
This place is way more entertaining if you keep that in mind.
Great minds think alike: https://www.reddit.com/r/ValueInvesting/comments/1qoo2b7/comment/o235a6q/?screen\_view\_count=3
Deep fried
Recent $25B in stock buybacks, $10B cash on hand, surpassing earnings estimates every quarter for 10+ quarters, and profit growth surpassing S&P growth. Healthy af financials
Assuming lucid can compete and doesnt go bankrupt by then. Doesnt look good. 35k is peanuts
It's a miracle Lucid hasn't gone bankrupt already. It's a classic zombie company. Everyone knows they're circling the drain and will go to zero within a few years at best. Idk why their share price hasn't gone to sub-$1 yet
Downvoted this guy for calling out adbe a value trap.
How does uber have a monopoly? What are their plans for when tesla/waymo or someone else comes out with driverless cars and are able to charge half as much for what many would say is a better experience? Eventually driverless cars will be everywhere. The only question is when.
yeah bro driverless cars are were such a flop
To me, $50k for a car is prohibitively expensive. But if you offered me a $50k Ferrari, I’d find a way to get the money to buy it because I know that a $50k Ferrari is a bargain.
This isn't at all how "value investing" works. You're confusing a "value stock" with your personal perception of "good value."
Having a thesis and metrics to defend an investment doesn't make a stock a "value stock."
defendable moats.
The whole reason Uber is priced the way it is is because it lacks a defensible moat... They run their apps on Apple and Google's software, rely on Google's mapping and drivers they don't employ to drive THEIR cars to run Uber's business. Uber owns practically nothing and therefore has no moat outside of a cultural one. Waymo or Tesla could come out with a driverless fleet tomorrow running on their own platforms, decide they don't want to share the market with Uber and completely eviscerate Uber's entire model. Their "asset-light" strategy would immediately become a strategic failure.
I don’t even know why you’d mention P/B for an asset-light business like Uber. Even P/E is barely in the top 10 metrics I’d use to evaluate Uber.
This is proving my point... P/B and P/E are hallmark metrics for value investing, if they are not important for evaluating Uber, Uber is not a "value stock."