Uber: Strong Network Effect Has Brought Domino’s Onboard

We are maintaining our $68 fair value estimate for narrow-moat Uber and continue to view the stock as attractive. Uber's network effect moat source, which we had assumed was present long before the firm's IPO, continues to drive restaurants of all sizes to the platform—the supplyside of the platform is strengthening. The latest one is Domino's which had long been against working with third-party order and delivery aggregators like Uber. Domino's announced a global agreement with Uber which allows Uber Eats users to order Domino's directly on the platform. However, Domino's will continue to make the deliveries. Domino's change of strategy displays Uber Eats' network effect, which as it has brought more smaller pizza shops and other restaurants onboard, has attracted more consumers, thus attracting more restaurants. We think Domino's have realized that exposure to Uber's strong network effect and its more than 130 million monthly users (including mobility and delivery users) is beneficial in the long run.