Uber just released their Q1 2020 earnings, and I thought this would be a great time to sit down with an expert and really dive into these earnings reports. What do they say about the status of Uber and Lyft and what do they mean for the future? In this episode, I talk to Charles Zvibleman, a hedge fund analyst, about these numbers. We’ll also cover AB5 and driver earnings, so don’t miss this episode.
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- Today I’m talking with Charles Zvibleman, a hedge fund analyst for 10 years
- Primarily focused on internet stocks, including Uber and Lyft
- Going beyond the CNBC headlines today
- We’ll also talk terms, so you can understand what these earnings mean
Intro to Charles Zvibleman
- Worked as a Hedge Fund Analyst for 10 years, primarily in internet stocks including Uber and Lyft
- Left the hedge fund world in September and currently consults and invests as an angel investor
- This will not be investment advice
- Keeps up to date on forecasts, earnings, and more
Using Public Information to Determine Profitability
- No special information – not an information advantage
- Doing research into the market, ultimate profitability, trajectory to get there
- Constantly looking at little data points
- Can focus on 10-15 stocks – not hundreds when you’re dealing with all this info!
Uber Quarterly Earnings Report
- Uber lost $3 billion! That’s catchy – and factually true
- EBITDA – proxy for cash flow. Stands for Earnings Before Interest, Tax Depreciation, and Amortization
- Standard term across the market – not something they created
- Break down that EBITDA number and focus on ride specific numbers and more specific numbers from there
- Uber’s adjusted net revenue – earnings from gross bookings and Uber’s cut
- When people talk about margins, they’re talking about a percent of Uber’s cut
- Other things come out of this take rate, including insurance and credit card processing fees
- They also have to pay sales and marketing, other huge expenses
What to Look for in Earnings’ Reports
- Compare numbers of what they expected vs what consensus expected
- Compare to the company’s guidance
- Consensus is important because it’s the aggregate of all analysts
- Monitoring quarter over quarter results – was this year better than last year?
- How healthy is the marketplace, especially as Uber and Lyft pull back on incentives
- What is the competitive environment like? Is it getting better every year?
Behavioral Questions & Macro Economics
- Tough to predict how consumer demand for rides will rebound
- Have to take into account how unemployment will affect demand
- Depending on whether or not Uber has to make drivers employees could affect the flexibility and even number of job opportunities for drivers
- If we move to an employment model for Uber and Lyft, U/L would probably need to reduce the number of drivers by 75% – not exactly in regulators’ interest at a time when unemployment is skyrocketing
- Big thanks to Charlie for coming on and chatting with me about Uber’s earnings report and what to be aware of when it comes to announcements like this
- Appreciated Charlie’s questions at the end and his perspective on AB5 and regulations
If you’d like to read a transcript of this podcast, please click here.