With the DoorDash (DASH) IPO having gone far better than anyone thought, making the stock untouchable at this point from my vantage point, the real takeaway for me is how cheap Uber Technologies (UBER) stock appears on a relative basis. According to Uber management, they expect margins in the rides business to be 50% above that of the food delivery business. This is undoubtedly due to the restaurant being the middleman for Uber Eats, with no third party involved in the legacy Uber rides division. With that in mind, consider the data below when valuing DASH and UBER, with the latter only operating in the food delivery space:
Uber 2019 “Rides” Revenue: $10.9 billion
Uber 2020 “Eats” Revenue (1/1-9/30): $2.5 billion
Current UBER equity market value at $53/share: $93 billion
DoorDash 2020 Revenue (1/1-9/30): $1.9 billion
Current DASH equity market value at $158/share: $62 billion
Based on the current business mix of both companies, how should Uber be valued relative to DASH? Is ~50% more a reasonable amount? Something to think about for sure.
Full Disclosure: Long shares of Uber at the time of writing, but positions may change at any time
SOURCE: Peridot Capitalist Blog Post Archive – Peridot Capital Management LLC – Read entire story here.