Some things 'don't smell right' about Uber stock buyback, strategist says

I think it is a a weak comp because their their, their Q2 guidance is was was diminished a lot and that’s what really took the stock down. So I think the real issue here is they did 66 cents of earnings in the fourth quarter of last year and they they booked the similar level of mobility growth. So everybody was thinking, OK, now we can count on 2530% annualized growth and mobility and that’s just not going to be the case here. So the other thing is you know delivery was 4% year on year growth and and their freight was -8. So you know you have to ask yourself if there’s just a sweet spot right now with travel that’s going to you know peak here and that’s really what they’re they’re catching is they’re riding the travel revenge travel wave and it’s it’s about over. You know, maybe they get through the summer, but that that’s it’s basically just taking off the euphoria on the stock more than anything. I’ll go get some growth out of it in 15% year on year revenue growth, nothing to sneeze out, that’s that’s excellent. So you know in all things considered, you know I think what they did is they saw that there was going to be weaker than the market expected, they were going to have a miss. So then they went ahead and decided to throw these equity write downs that are from you know businesses in China and Russia and other places that they’re they’re they’re minority partners are not doing as well and just say hey let’s throw everything that that’s not going to work out right now, get it all done and then clean up the balance sheet in that in the story for the rest of the year. All right. So you just mentioned the delivery business 4% year over year growth, but you’re kind of scoffing at that. So what’s your take on the delivery business, Obviously the US consumer under quite a bit of pressure when you look at middle income and lower income. Yeah, I just don’t understand how they can get a 20% markup on on delivery and and try to make money at it. I mean when you look at the, you know the the the leverage of their growth and you know their their bookings is returns year on year similar to mobility but they just did so little cash out of that business whatever they have to pay you know they have to basically deliver meals not people. And there’s there seems to be a lot more cost and a lot less profit for them in doing that And so they just don’t get the leverage. So you know they’re really kind of A1 horse show here. They put investments into to you know freight. They bought a company in 2021. They’ve got a deal they announced with Instacart for the delivery business which is grocery to add to that to theirs. The restaurant you know mix that they have but at the end of the day you know the the actual revenue masks 55%. Now mobility used to be 50. There’s still, you know, basically a one hour show and that’s that’s the Uber, you know, passenger service. Yeah, seeing your notes, you also think the, the 8% decline in freight is a bit disappointing and maybe even troubling. But in all fairness, the digital freight brokerage business has been under pressure, whether you’re Uber or anybody else. I want to go to one other thing, the buyback, Uber ended the quarter with $5 billion in cash. The fact that they’re doing a buyback, how do you view that? I mean sometimes when you see buybacks, it’s a sign that the company just isn’t innovating. But this is a space where a lot of innovation could be on the way either through AI or autonomous driving or you know, a combination of course. Yeah, it’s fascinating. They did the buy back in February, then they said, hey, you know, we’re we’re, we’re, we’re undervaluing the business and then they went on this talk about it, you know, compensating internal compensation. So you have two worries here. One is you know the CEO that came in and cleaned up the business seven years ago probably brought in the team, brought it, brought in a lot of equity option compensation. So you worry that they’re just trying to you know cover up some internal decision making on, on you know that diluted the stock. Having said that, the other thing to worry about is, is the AI business. They actually were in AI in 2017 and exited in 2020 and if you look at the freight business, they just talk nothing more than AI. So they have, they have probably been a first mover in AI and haven’t monetized it. So in that sense you also you kind of go, I don’t know. So the real issue here is why would you put a buyback on the table. You know your IPO price is 45, the stock hits 80, you you go out with a buyback that’s pretty much the, the total opposite time that you would want to do it. You know the argument here they’re making obviously is the one you made which is you know we have immense leverage. We have the AI boom on our way and with travel bookings underway, we can actually take take this way up to 160. But you know that’s that’s a real bullish bet in the market where the a lot of the cyclicalities work against you. Now you know rates are still high in the United States. We’ve got a lot of stories like Starbucks, McDonald’s, where retail spending is falling and you got to say to yourself, I think this there’s some things that don’t smell right about this stock by bit, let’s put it that way.