Uber Earnings Analysis: Reddit Warning vs. Market Reality

The original Reddit post warns that Uber is vulnerable ahead of earnings due to several key concerns:

• Valuation Risk
  : Uber trading near all-time highs while restaurant peers have sold off significantly
• Consumer Weakness
  : Specific weakness in 25-35 year old demographic reducing spending
• Uber Eats Exposure
  : 32% of revenue tied to food delivery, seen as leveraged bet on declining restaurant traffic
• Limited Upside
  : High expectations with potential for 10-15% correction if delivery growth slows or guidance is cautious
• Peer Comparison
  : Restaurant stocks aligning more with DoorDash than Uber/Lyft according to commenters

Reddit commenters largely support the bearish view, with suggestions for put options and concerns about long-term disruption from autonomous vehicles like Waymo.

Market data provides a more nuanced picture that both validates and challenges Reddit concerns:

:

• Fast-casual stocks have indeed sold off dramatically: Chipotle down 44% YTD, Cava Group down 51% YTD, Sweetgreen down 76% YTD [citation:1][citation:3][citation:4]
• McDonald’s has been relatively resilient with only ~4% decline [citation:8]
• Consumer weakness specifically attributed to 25-35 year old cohort reducing restaurant spending due to inflation concerns [citation:1]

:

• Uber stock reached all-time highs in 2024 with 144.22% gains, significantly outperforming S&P 500’s 30.94% growth [citation:1]
• Uber achieved second consecutive profitable year in 2024 [citation:7]
• Uber Eats represents 32.7% of total revenue, closely matching Reddit’s 32% claim [citation:5]

:

• Restaurant traffic declined for seven consecutive months through August 2024 [citation:9]
• However, online food delivery sector continues to grow while restaurant traffic declines [citation:9]
• Food away from home costs rose 3.9% over the past year, potentially driving delivery adoption [citation:9]

The analysis reveals a fundamental contradiction in the Reddit thesis. While Reddit correctly identifies consumer weakness in the 25-35 demographic and restaurant sector struggles, the conclusion that this poses a risk to Uber Eats may be flawed.

: Declining restaurant traffic may actually benefit Uber’s delivery business through the substitution effect. As consumers cut back on dining out due to cost pressures, they may shift toward delivery options, potentially accelerating Uber Eats growth despite broader restaurant weakness.

:

• High valuation expectations are legitimate given Uber’s 144% run-up
• Consumer weakness in the target demographic is confirmed
• Revenue concentration in delivery (32.7%) creates segment-specific risk

:

• Uber’s delivery segment continues showing strong performance in Q3 2024 [citation:7]
• The substitution effect from restaurant to delivery may offset consumer weakness
• Uber’s profitability achievement suggests business model resilience

:

• High expectations could lead to sharp pullback if delivery growth disappoints
• Consumer spending weakness could eventually impact delivery frequency
• Autonomous vehicle disruption (Waymo concern raised by Reddit) remains a long-term threat
• Economic pressures could reduce both dining out AND delivery spending

:

• Substitution effect from declining restaurant traffic to delivery services
• Cost inflation driving consumers toward more convenient delivery options
• Market share gains as weaker restaurant partners struggle
• Continued profitability improvement could support higher valuation

The Reddit warning highlights legitimate concerns about valuation and consumer weakness, but may underestimate the substitution benefit to delivery services. Investors should focus on:

1. Q3 delivery growth metrics and guidance
2. Management commentary on consumer behavior trends
3. Evidence of restaurant-to-delivery substitution in results
4. Profitability trajectory and free cash flow generation

A 10-15% correction is possible if delivery growth disappoints, but the fundamental thesis that declining restaurant traffic harms Uber Eats appears questionable based on current trends.