Uber Earnings: Operating Profitability Hits as Supply Side of Network Effect Remains Intact

We are maintaining our $68 fair value estimate on Uber and continue to view its shares as attractive even after doubling year-to-date. The platform's network effect continued to strengthen with an increase in users, trips, revenue generated per user, and per trip. On the bottom line, Uber reported its first-ever GAAP operating profit as top-line growth and lower user acquisition costs created operating leverage. We expect margin expansion to continue, driven by a return to growth in the freight segment, continuing growth in high-margin advertising, growth in Uber One, and further streamlining of mobility and delivery.