Since its Initial Public Offering (IPO), I've been overly bearish on the ability of Uber (NASDAQ:UBER) to grow over time. The valuation Uber received initially did not make sense, and I still think a significant amount of downside could play out in the coming quarters as the coronavirus pandemic wreaks havoc on the global economy. That said, in this article I'm going to highlight the bull case for owning Uber in a growth portfolio at these levels.
One of the key drivers of a bullish thesis on Uber is not its ride hailing business, but rather its food delivery service business. The company’s announced acquisition of Postmates for $2.65 billion U.S. recently is very bullish in this regard, as it will result in Uber taking the top spot in terms of market share in the food delivery space.
Over the long term, I see this business as one of the more profitable growth areas for Uber, Restaurants will shift how they reach the public can look for ways to grow revenue and earnings while retaining their same footprint. The COVID-19 pandemic has accelerated the shift, with many restaurants relying on such services for survival.
Uber's position as a market leader in a number of high-growth sectors should not be discounted. Despite concerns around the company's balance sheet dissuading same some investors from owning Uber, I do think this stock is relatively attractive at these levels given the long-term growth trajectory I see in these core businesses.
Invest wisely, my friends
