UBER - Valens Credit Report - 2022 02 17
CDS markets are materially overstating credit risk with a CDS of 281bps relative to an Intrinsic CDS of 45bps, while cash bond markets are grossly overstating credit risk with a YTW of 5.580% relative to an Intrinsic YTW of 2.300%. In addition, Moody's is materially overstating UBER's fundamental credit risk with its highly speculative B2 credit rating seven notches below Valens' IG4+ (Baa1) credit rating.Incentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. UBER's compensation framework should drive them to focus on margin expansion and revenue growth, which may lead to Uniform ROA expansion. Moreover, management members have low change-in-control compensation indicating they are not incentivized to pursue a buyout. Finally, CEO Khosrowshahiis a material owner of UBER stock relative to his compensation, indicating he may be able to push other NEOs to be well-aligned with shareholders for long-term value creation.
Earnings Call Forensics™ analysis of the firm's Q4 2021 earnings call (02/09) highlights that management is confident the Omicron wave was only a temporary deterrent to demand and that the free delivery and ride discounts provided by Uber One are a strong value proposition for consumers.
Uber Technologies provides ride hailing services. The company develops application for road transportation, navigation, ride sharing, and payment processing solutions. The company serves customers in the United States and Canada, Latin America, Europe, Middle East, and Asia Pacific markets, excluding its discontinued China operations.
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