Will Robotaxis Kill Uber? The Market Is Afraid of the Wrong Thing

Will robotaxis bring Uber down?

My answer is no. The market is afraid Uber will be disrupted by self-driving cars; I think Uber becomes the platform those cars run on. And while everyone worries, the company is posting record operating income and roughly $10 billion in free cash flow.

Uber has sat near its 52-week lows for a while now. Read the headlines and the reason is obvious: people fear that self-driving cars are coming and Uber becomes irrelevant.

I understand the concern. But what's actually happening inside the business tells a different story.

Point 1: This is not a dying business

Start with the headline: over the past year Uber posted record operating income and about $10 billion in free cash flow.

Those are not the numbers of a dying company. They're the numbers of a growing one the market is mispricing out of fear. I remember when the CEO said, "The market cares about free cash flow now — we're going to grow it." And you can see it: quarterly FCF dipped, then turned back up. That doesn't guarantee the future — robotaxis are a real threat — but the question is what Uber is doing to meet that threat and keep growing.

Point 2: Uber becomes the platform, not the roadkill

Here's the picture I see in the robotaxi narrative: Uber doesn't get disrupted — it partners.

It already has a relationship with Waymo and is building more autonomous-vehicle partnerships, so self-driving fleets plug directly into Uber's network. Think about that — Uber becomes the platform autonomous vehicles run on. That's not a threat; it's an opportunity.

Point 3: It's no longer a "rides + delivery" company

Uber is becoming something much larger than rides and food delivery.

Uber One, its subscription service, just crossed 50 million members. Its in-app advertising business is running at $2 billion a year, and it now books hotels. The company is turning into something far bigger — while the stock lingers near its lows.

Uber by the numbers

Market cap around $150 billion, enterprise value about $178 billion — that $28 billion gap is debt. But last year's $10 billion in free cash flow makes it manageable.

Returns on capital aren't great right now, but they're improving fast: negative over the last five years, then 8.36% last year. Same story on margins — a five-year average of 6.5%, but 16% last year. Uber has spent only about $1.5 billion on acquisitions over five years, and revenue grew 17% a year over three years and 38% a year over five. The P/E is around 15.

Honestly, a company like this is harder to model. The history is short and still improving, so it's tough to pick the "right" inputs. Still, here's what I used for the next ten years: revenue growth of 4/7/10% (roughly doubling each decade), net margin and FCF of 18/22/26%, a P/E ten years out of 18/22/26, and a 9% required return. Uber hasn't hit most of those margins yet, but as it leans harder into profit and cash flow, there's room to get there.

Run that and I get a low of $85, a high of $255, and a midpoint of $150, with a potential return around 19%. For balance: analyst earnings estimates aren't great — about $3.13 per share growing to $5 over the next five to seven years — while revenue nearly doubles from $60 billion to $105 billion over seven years. That gap is the thing to watch on this name.

Getting paid to wait

I don't just wait for Uber to reach my price. I sell cash-secured puts.

Say Uber is around $73 and I want it at $65. Selling a put about a month out at a $65 strike, someone pays me nearly $1 per share. Repeat that every month and it's roughly a 16.8% annual cash yield. If Uber drops to $65 or below, I buy at $65 and keep my $1 — effectively paying $64. If it stays above $65, I keep the premium and don't get the shares. Either way, I win.

FAQ

Q: If self-driving cars go mainstream, don't Uber's drivers disappear and the business collapse? A: Uber is treating autonomy as a partner, not an enemy. Working with Waymo and others, it's making autonomous fleets run on the Uber network. Shifting from a driver-based model to "the platform autonomous vehicles run on" turns the threat into an opportunity.

Q: Is Uber cheap right now? A: At a P/E of 15, with record operating income and about $10 billion in FCF, I think it's an attractive zone. My model's midpoint fair value is $150, with a potential return near 19%. That said, analyst earnings estimates are conservative, and the short operating history makes the future assumptions genuinely uncertain.

Q: What kind of company is Uber now? A: Not just ride-hailing and food delivery. It's expanding into a platform spanning subscriptions (Uber One's 50 million members), in-app advertising ($2 billion a year), and even hotel booking.

The point is always the same: it's not what you buy, it's what you pay. I think Uber is a good business — but I only buy it when the price makes sense.