1、Equity Research 4 June 2019 CORE Barclays Capital Inc.and/or one of its affiliates does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investo
2、rs should consider this report as only a single factor in making their investment decision.This research report has been prepared in whole or in part by equity research analysts based outside the US who are not registered/qualified as research analysts with FINRA.PLEASE SEE ANALYST CERTIFICATION(S)A
3、ND IMPORTANT DISCLOSURES BEGINNING ON PAGE 100.Restricted-Internal U.S.Internet Scorching The Earth One Ride At A Time;Initiating Uber OW,Lyft EW Initiating Coverage On UBER(OW)And LYFT(EW):Ride-hailings future promise is almost equally as impressive as the capital destructed since the inception of“
4、Scorched Earth”strategies.After experiencing two of the worst-received IPOs in technology history,the backdrop for a contrarian like us to be constructive on the space is actually quite interesting right now.We think consensus is too bearish on rides unit economics,which are near breakeven today for
5、 Uber and slowly approaching that level for Lyft.At 4x revenue,with higher growth rates than most other large caps we cover,we would dip a toe into the water and take a position,but fully expect the names to continue to chop around a bit(and if the S+P were to continue to trade off,these two have li
6、ttle val-support given the high cash burn).We prefer UBER shares to LYFT based on better unit efficiency but think both are good against-the-crowd longs here.This report is a 100 page deep-dive on from a bottom-up perspective on UBER and LYFT,and we are publishing a companion top-down piece alongsid
7、e our Global Autos team:See Cutting the car ownership cord from Brian Johnson and Kristina Church,6/4/19).UBER The Multi-Service Global Play:UBER screens well on two of the three things we care about with our ratings:1)sentiment seems washed out and negative,and 2)fundamentals are actually a tad bet
8、ter than we think the street is giving Uber credit for.At 4x rev,investors are paying a discount vs.two-sided marketplace peers and are stepping in near trough KPIs which should improve going forward.Ubers scale and multi-service approach should give it some advantage,and we find a few more call opt
9、ions(in our SOTPs)relative to LYFT.This investment idea comes with a fair amount of risk,but also pretty big reward as estimates head higher starting later this year,when we think the multiple firms up.Our$50 price target is based on 4x revenue.LYFT Pure Play On North America Ride-Hailing:Taking a f
10、resh look at LYFT without any of the baggage of being involved on its IPO,we actually want to be constructive here.On the surface the story sounds attractive,Lyft is:1)a founder lead company growing faster and taking share from a larger competitor who is fighting wars on many continents,and who has
11、had a revolving door at the C-Suite,2)concentrated in NA,one of the best ride-hailing markets WW,and 3)massively improving its unit economics.However,Ubers unit efficiency advantage gives it the ability to respond aggressively if share continues to shift.Lyft even laid out its own bear-case in a rec
12、ent appeal to NYC around the 58%driver utilization rate and minimum wage regulation-Uber simply wins because of its scale.For this reason,along with a valuation that is similar to Uber,and gross bookings growth likely at parity in a few quarters,we currently prefer UBER shares to LYFT.Our$55 price t
13、arget is based on 4x revenue.INDUSTRY UPDATE U.S.Internet POSITIVE Unchanged For a full list of our ratings,price targets and earnings in this report,please see table on page 2 U.S.Internet Ross Sandler+1 415 263 4470 BCI,US Deepak Mathivanan+1 415 274 5351 BCI,US Mario Lu+1 212 526 4885 BCI,US Trev
14、or Young,CFA+1 212 526 3098 BCI,US Thomas Chadwick+1 212 526-3385 BCI,US U.S.Autos&Auto Parts Brian A.Johnson+1 212 526 5627 BCI,US European Autos&Auto Parts Kristina Church+44(0)20 3134 2199 Barclays,UK Investment Sciences Ryan Preclaw+1 212 412 2249 BCI,US Barclays|U.S.Internet 4 June 2019 2 Summa
15、ry of our Ratings,Price Targets and Earnings Estimates in this Report Company Rating Price Price Target EPS FY1(E)EPS FY2(E)Old New 31-May-19 Old New%Chg Old New%Chg Old New%Chg U.S.Internet Pos Pos Lyft,Inc.(LYFT)N/A EW 57.62 N/A 55.00-N/A-9.36-N/A-3.98-Uber Technologies Inc.(UBER)N/A OW 40.41 N/A
16、50.00-N/A-5.01-N/A-3.18-Source:Barclays Research.Share prices and target prices are shown in the primary listing currency and EPS estimates are shown in the reporting currency.FY1(E):Current fiscal year estimates by Barclays Research.FY2(E):Next fiscal year estimates by Barclays Research.Stock Ratin
17、g:OW:Overweight;EW:Equal Weight;UW:Underweight;RS:Rating Suspended Industry View:Pos:Positive;Neu:Neutral;Neg:Negative Valuation Methodology and Risks U.S.Internet Lyft,Inc.(LYFT)Valuation Methodology:$55 PT based on 4x our FY20/21E revenue estimates.Risks which May Impede the Achievement of the Bar
18、clays Research Valuation and Price Target:Decelerating booking growth,high cash burn,and limited capital reserves may make it more challenging to fund incremental growth investments.Lyfts lower utilization and scale may also be a structural disadvantage.An upside risk is that Lyfts single-service,US
19、 market focus may enable it to take share and achieve above peer level ANR growth,potentially driving upside to estimates and the stock.Uber Technologies Inc.(UBER)Valuation Methodology:$50 PT based on 4x our 2020E/2021E revenu estimates.Risks which May Impede the Achievement of the Barclays Researc
20、h Valuation and Price Target:Limited valuation support suggests multiple could re-rate lower given high cash burn in event broader equity markets decline.Decelerating gross bookings growth,despite modest 2%market penetration,may suggest anticipated long runway of market penetration may not fully mat
21、erialize.Take rate declines may not inflect as quickly as expected,pressuring margins and contributing to negative estimate revisions.Global scale may not be as meaningful for a localized business.Market share losses in some countries may persist.Source:Barclays Research.Barclays|U.S.Internet 4 June
22、 2019 3 UBER TECHNOLOGIES,INC(UBER):THE MULTI-SERVICE GLOBAL PLAY,$50 PRICE TARGET.4 UBER:Six Reasons To Be Bullish.4 UBER:Five Risks to Monitor.13 Valuation&SOTP Methodology.20 LYFT,INC(LYFT):PURE PLAY ON NORTH AMERICA RIDE-HAILING,$55 PRICE TARGET.21 LYFT:Five Reasons to Be Bullish.21 LYFT:Five Ri
23、sks to Monitor.27 Valuation Methodology.32 RIDE-HAILING INDUSTRY.33 Making Sense of Uber&Lyft Intricate Accounting Differences.33 TAM-Car Ownership vs.Mobility As A Service.38 Unit Economics of Ubers Rides Business.49 Long-Term Price Elasticity Unclear.52 Case Study:Evolution of Ride-hailing in NYC.
24、56 FOOD DELIVERY INDUSTRY.60 Uber Eats:Still in Venture Stage with Long Term Upside Potential.60 Eats Unit Economics Deep Dive.64 TAAS INDUSTRY OVERVIEW.73 Challenges of Ride Hailing,Food Delivery&The Scorched Earth Playbook In General.73 What May Solve Churn&Build A Moat?Potentially Rewards Program
25、s.76 Ubers Other Bets Segment Micromobility&Freight A Closer Look.83 The Shift To Autonomous.88 Comparable Companies Valuation Analysis.91 Barclays|U.S.Internet 4 June 2019 4 UBER TECHNOLOGIES,INC(UBER):THE MULTI-SERVICE GLOBAL PLAY,$50 PRICE TARGET Uber Technologies Inc.(UBER):Quarterly and Annual
26、EPS(USD)2018 2019 2020 Change y/y FY Dec Actual Old New Cons Old New Cons 2019 2020 Q1 N/A N/A-2.26A-2.23A N/A-0.70E-0.51E N/A 69%Q2 N/A N/A-2.90E-1.25E N/A-0.87E-0.49E N/A 70%Q3 N/A N/A-0.84E-0.56E N/A-0.86E-0.50E N/A-2%Q4 N/A N/A-0.73E-0.50E N/A-0.75E-0.50E N/A-3%Year 2.08A N/A-5.01E-2.92E N/A-3.1
27、8E-1.83E N/A 37%P/E 19.4 N/A N/A Source:Barclays Research.Consensus numbers are from Refinitiv received on 03-Jun-2019;13:35 GMT UBER:Six Reasons To Be Bullish#1 You Are Buying UBER Shares On Trough KPIs&Discounted Valuation-It Gets Better In 4Q19 From a timing perspective,any investor in the bull c
28、amp can argue that you are buying shares of Uber a couple of quarters after the KPIs imploded,and arguably at a steep discount to other marketplace businesses on EV/Rev.This is understandable given the noise around the LYFT and UBER IPOs and the lack of public market track record for the two compani
29、es.FIGURE 1 Uber Is Cheap vs.Growth Profile,And You Get Eats($12B)and Equity Stakes($11B)Effectively For Free Source:Barclays Research,Refinitiv It feels like buying FB shares in the several months after the extremely weak 2Q18 print,you knew back then that trends would improve,you just didnt know e
30、xactly when to time the entry point and how long youd have to wait to get paid as a bull(although the regulatory climate is evolving in real-time).The same could be said here for Uber.Rides take rate started to roll over in mid-3Q18,and ANR has cratered since 100+growth in 2017.Following the IPO the
31、re was also some confusion around the ex-FX growth rates for their rides business because of the limited disclosure,and 1Qs 29%ex-FX should have put some UBERLYFTDHERJEGRUBTKWYAMZNGOOGLFBBABATCEHYNFLXBKNG2.0 x3.0 x4.0 x5.0 x6.0 x7.0 x0%10%20%30%40%50%2020E EV/Rev2020E Revenue Growth Y/YUBER Stock Ra
32、ting OVERWEIGHT Industry View POSITIVE Price Target USD 50.00 Price(31-May-2019)USD 40.41 Potential Upside/Downside+23.7%Barclays|U.S.Internet 4 June 2019 5 of that to bed(there is a massive difference in perception around Uber if rides GBs are growing close to 30%vs.close to 20%).And the take rates
33、 on both sides of the house are imploding(from 23 to 20%for Rides and 13%to now 8%for Eats),rides from subsidies in the US and BR markets,and Eats from the mix shift of India and building out restaurant selection(both being subsidized).The good news is that by 3Q or 4Q19,we expect most of these tren
34、ds are going to dramatically turn positive.Eats is improving a little earlier than this,with our checks pointing to market share gains in 2Q in the US based on higher conversion rates in app from the lower delivery fee display.Looking into 2020,Rides GB growth probably accelerates once the Careem de
35、al is closed,and both Rides and Eats take rates should be flat to up Y/Y.So in a weird way,Uber may have just picked a bad time to go public and after a few quarters of improving investor confidence and better KPIs,the multiple might even re-rate higher,back towards the marketplace peer set.We dont
36、think the next print is going to change the narrative,but wed look to 2H19 as where that may start to play out.The company should lap the Rides take rate hit by 4Q19 when things will really accelerate-and we want to start a position ahead of that.#2 Scale Begets Scale Ubers global business is second
37、 to none in ride-sharing and food delivery,in our view.We estimate the company will facilitate 6.0B trips in 2019,up 23%from 2018.While enormous already,the miles these trips represent less than 1%of the total miles that consumers took in aggregate in these countries.Uber operates ride-sharing in 57
38、 countries and Eats in almost as many.Uber maintains 65%or greater ride-sharing market share in 4 regions,and 50%-65%in the remaining 2 regions where the service is legal,illustrated below in Figure 2.There are a handful of countries where Uber lost the war with a primary competitor,either from the
39、time or level of investment in those markets,or from regulatory challenges.In each of these cases,Uber wisely divested its business into the primary competitor for equity stakes rather than continue to wage war at the expense of profits in markets where the company was unlikely to win.FIGURE 2 Over
40、50%Share OF Ride-Sharing Category In All GEOs Incl.65%In US And Europe Source:Barclays Research,Company Documents Barclays|U.S.Internet 4 June 2019 6 A key question is how fast Ubers gross bookings can grow in light of the significant TAM and under penetration within each of these markets.We are cur
41、rently modelling gross bookings growth in Rides to decelerate from 34%ex-FX in 2018 to 21%in 2019 and 18%in 2020.The pace of deceleration over the past 4-5 quarters has been surprising to us and the investment community.We think the industry may be going through some growing pains,similar to what we
42、 experienced in earlier years in e-commerce and online travel,whereby certain supply or capacity constraints limit the pace of growth in the overall market,but that a healthy double-digit growth rate can recur for much longer than in other sectors given the low penetration.Weve moved out of the hype
43、r-growth stage where early adopters,like business users and city-dwelling millennials,start to full penetrate yet the later adopters(suburban or rural users)have yet to shift trips to ride-sharing.Despite these slowing growth rates,Uber is still adding more dollar share Y/Y to its business than Lyft
44、 or other peers in the 57 countries that the company operates.This is a bit of an AWS-Azure dynamic at play,whereby the#1 player in the space is growing slower than the#2,but that dollar share continues to accrue to#1 because#2 is growing off such a lower base(from that standpoint we ask ourselves,i
45、s Lyft really taking share and catching up?Is Azure or GCP in cloud?).FIGURE 3 Uber%Share of Y/Y Market Growth(US/CAN)FIGURE 4 Absolute Dollar Bookings Growth Y/Y(US/CAN)Source:Barclays Research,Company Reports Source:Barclays Research,Company Reports;Note:Lyft Bookings adjusted higher by 15%to incl
46、udes estimates for Taxes,Feels,and Tolls#3 Higher Engagement Through Multiple Services One of the big appeals of Uber and other ride-sharing apps is that they see engagement with their MAPCs on a fairly frequent basis(67 trips per MAPC per year in 2018).Most companies in consumer internet have to tr
47、y and win user loyalty with far fewer transactions per user per year.Uber is already fairly high frequency in its core rides business and is in the process of rapidly expanding the level of engagement with each MAPC across a number of everyday purchase considerations,including food and micromobility
48、(bikes/scooters)and even public transportation that the company doesnt manage(i.e.surfacing muni bus and subway options in app).82%60%20172018$6,506$5,189$3,084$3,988 20172018Uber-Rides(US/CA)Lyft(Adjusted)Barclays|U.S.Internet 4 June 2019 7 FIGURE 5 Ubers High Frequency Should Bring In Other Opport
49、unities,Like Weve Seen With Eats Source:Barclays Research,Company Reports Weve seen other companies in global ride-sharing take advantage of the high frequency nature of their core business to build out other new services,not just in transportation but across the board.Grab(private,not covered)has t
50、urned what was originally a single-purpose app into a multi-faceted super app with rides,food,local O2O transactions and payments all integrated.Payments is particularly interesting as Grab has been able to leverage its position in transactions to move into a digital wallet strategy that lowers inte