Uber

I'm thinking of buying UBER stock or bonds. The thesis is the same as it was for TSLA; the company has off-balance-sheet assets that would be valuable even in a bankruptcy. I haven't gone through the numbers, but here is the thesis.

For TSLA the assets were intellectual property and a number one market position. For UBER it's not as clear cut. They clearly do have a number one position. This makes a difference because of network effects. So they have more customers -> drivers get more fares -> more drivers -> customers have shorter wait times -> more customers.

I'm not really sure about the intellectual property...If it's only an app with central scheduling, well that would be easy for an Amazon to replicate. I know they spent big bucks on self-driving technology, but they are probably in last place here.

According to the new CEO, Uber Rides is currently profitable and will get more so. Uber Eats is still a loser, and faces substantial competition from low cost local companies. These local firms can employ cheap illegal immigrant deliverers which a public company cannot. Uber Freight is just getting going, but I think the network effects will be strong. A business will want to use an established corporation, with deep pockets, for its freight. So the locals are not a threat.

Uber also owns minority stakes in Didi (DIDI) in China, Yandex taxi (YNDX) in Russia and GrabTaxi (GRAB) in Southeast Asia. According to Uber, these are worth 11.8B. That's a good cushion for the bonds.

I'll go through the numbers in a later post. Right now, the bonds seem a great buy, and the stock maybe as well.