In this report, developed in collaboration with Morningstar, we take a deeper look at Uber, the most valuable VC-backed company in the US, ahead of its upcoming IPO. We believe that Uber is likely to maintain its competitive advantage via its network effect and intangible assets, which could position the firm to become profitable and generate excess returns on invested capital in the future.
- We assign Uber a fair value estimate of $110 billion as the firm is projected to increase its top line by 27% annually during the next 10 years, driven by continued expansion in new cities and regions globally, plus an increasing adoption rate as the company attracts more users.
- We expect Uber to grab nearly 50% of the ridesharing market by 2022 (up from 29% in 2017) as it leverages its first-mover advantage along with its network effect and data moat sources.
- We value Uber's total addressable market, which includes the aggregate of the global taxi, ridesharing, and food delivery industries along with the US markets for freight brokerage and the share we believe ridesharing companies can take from global public transport and US bikeshare, at $630 billion by 2022, representing a 26% five-year compound annual growth rate.
- We believe autonomy is the most transformative technology set to affect the world of ridesharing; we see powerful economic forces driving autonomous vehicle adoption in the ridesharing industry, from which Uber may benefit.
Note: This report was updated on August 2, 2018, to amend an error in a chart.