UBER - Valens Credit Report - 2021 03 15
Credit markets are grossly overstating credit risk with a cash bond YTW of 4.278% relative to an Intrinsic YTW of 1.598% and an Intrinsic CDS of 61bps. Meanwhile, Moody's is materially overstating UBER's fundamental credit risk with its highly speculative B2 credit rating seven notches below Valens' IG4+ (Baa1) credit ratingIncentives Dictate Behavior™ analysis highlights mostly positive signals for investors. UBER's compensation framework should drive management to focus largely on margin expansion and top-line growth, which should lead to Uniform ROA improvement. Additionally, management members have low change-in-control compensation indicating they are not incentivized to pursue a buyout, and UBER's large market capitalization limits event risk related to a sale of the company
Earnings Call Forensics™ analysis of the firm's Q3 2020 earnings call (11/5) highlights that management generated an excitement marker when saying that Mexico is one of the leading markets of Cornershop. They are also confident demand for Uber is high in Brazil and Latin America
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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