Uber Earnings: Network Effect Is in Full Motion

We are maintaining our $68 fair value estimate for narrow-moat Uber Technologies. The network effect economic moat source is coming to fruition as demand on the firm's platform increases and consumer and driver acquisition costs decline; together, this is driving top-line growth and margin expansion. The moat is also creating more pressure on the few competitors that remain, including Lyft in the United States. While we think Lyft has also benefited from higher demand, higher driver incentives likely pressured its margins. DoorDash remains the clear delivery market leader, but it may need to diversify its business to bring in more couriers, which is why we still think that an acquisition of Lyft by DoorDash would be the right strategy.