Uber's Valuation Debate: Bullish Article Clashes with DeepValue's Caution on Accounting and Risks

What happened

A Seeking Alpha article published on December 24, 2025, claims Uber is 'way too cheap,' citing accelerating Q4 results and improving profitability, with autonomous driving as potential upside. However, DeepValue's master report, based on SEC filings including the 2025 10-K and Q4 10-Q, reveals that Uber's reported net income is heavily inflated by one-off deferred tax allowance releases and volatile unrealized equity gains, obscuring underlying cash earnings. The stock trades at ~11.6x trailing EPS and ~36x EV/EBITDA, but these multiples are misleading due to non-recurring items, and a free-cash-flow-based DCF model indicates it is ~74% overvalued relative to an intrinsic estimate of ~$53 per share. Despite strong free cash flow growth, network effects, and guidance for continued high-teens Gross Bookings growth, regulatory risks around driver classification and intense competition threaten future margins and stability. Consequently, the article's bullish narrative overlooks the stretched valuation and persistent uncertainties highlighted in the filings, suggesting investors should look beyond surface-level profitability claims.

Implication

Short-term, the conflicting narratives may drive volatility, but the fundamental overvaluation implies limited upside unless core cash earnings sustainably exceed conservative assumptions. Long-term holders must focus on metrics like free cash flow and Adjusted EBITDA rather than flattered headline EPS to gauge true profitability and moat durability. Regulatory outcomes, particularly on labor classification in key markets, could materially increase costs and compress margins, necessitating a reassessment of the investment thesis if adverse rulings emerge. The company must execute on sustained double-digit Gross Bookings growth and margin expansion to justify its premium, but competitive pressures and potential legal setbacks pose downside risks. Prudent investors might consider trimming positions or awaiting a pullback to a more attractive entry point that incorporates a margin of safety, aligning with DeepValue's 'POTENTIAL SELL' stance for new capital.

Thesis delta

The new article advocates for Uber being undervalued based on recent operational momentum, but DeepValue's thesis remains unchanged as a 'POTENTIAL SELL' due to overvaluation and risks. This divergence stems from the article overlooking accounting noise that artificially boosts earnings, while the report's analysis, grounded in SEC filings, highlights a stretched valuation with limited margin of safety. No fundamental shift in the thesis is indicated; instead, the article presents a superficial view that conflicts with the detailed, critical assessment of financials and persistent headwinds.