Uber reported another quarter of big growth with topline growth at 30% and big losses of a billion dollars in the last 90 days according to GAAP metrics. With revenue on track to top $15 billion over the next twelve months, the stock is trading at less than 4x sales. With that kind of topline growth and with gross margins around 50% that will be trending higher over the next few years, I’d expect this stock to trade closer to 6x or 8x sales in the current market valuations. Uber has 104 million users worldwide which means that the $58 billion market cap values each user at $557. Compare that to Netflix (which itself if 30% off its recent highs), for example, at 150 million users at a $128 billion market cap (6x this year’s sales), valuing each current user at $847.

Let’s dig into why the stock is trading at what seems to be a discount to near-term fair market valuation in addition to being a long-term opportunity. Here are some of the most important metrics from Uber’s quarterly report:

Revenue for Uber Eats, the company’s food delivery service, was up 64% year over year, clocking in at $645 million and up almost 10% quarter over quarter. Uber Freight grew 78% year over year, coming to $218 million for the quarter. Uber’s most established segment, rides, grew 19% year over year to $2.90 billion.

Uber reported $38 million in revenue for its Other Bets, which includes segments like its scooter business, compared to $3 million in the same quarter last year. Revenue for ATG and Other Technology Programs, which includes its self-driving car business, was $17 million, according to the release.

I wish the company would abandon its scooter business which seems like a silly distraction and unlikely to be a meaningful contribution to revenue and earnings. I’m impressed that the Uber freight is already pushing itself into a billion dollar annualized revenue run rate. Amazon and Uber can take a lot of marketshare from FedEx, UPS, Postal services and trucking shipping companies in coming years. FexEx and UPS alone combine for some $140 billion in annual sales. The global ridesharing/taxi business is growing steadily and will be a recurring revenue stream for Uber for many years to come. Uber’s global penetration is helping the company stave of competition somewhat and Uber will likely have the balance sheet to control a fleet of self-driving cars, including Teslas, if Driverless ever becomes a true reality, which would mean that competition will decrease and margins increase over time.

In the near-term, the stock is still being tainted by its connection to Softbank and this week everybody’s worried about the lockup for insiders expiring. Both of these issues are short-term in nature and are the kinds of reasons that create opportunities for long-term investors. So while I’m pretty mad at myself for having gotten involved in UBER since the stock has gone down since I’ve first bought it, I’m also thinking it’s probably a good time to buy more if the stock gets crush tomorrow off this earnings report. I’d sent out a Trade Alert and nibbled some UBER last time it was near $29 which is where its trading after hours tonight. If it gets sold off 10% or so tomorrow or in the next few weeks ahead, I’ll be buying another tranche near $28 or so.

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