Uber Technologies - Implementation of DCF Model

Running head: UBER TECHNOLOGIES 1
UBER TECHNOLOGIES

Running head: UBER TECHNOLOGIES
Executive Summary
Uber technologies commonly known as Uber is an American based company which offers
the services that are inclusive of peer-to peer rides and they can also be shared. The below
report discusses about the implementation of DCF model and how well it can define whether
the share price is overvalued or undervalued. Further, the rationale behind the DCF model has
also been discussed to get an overall understanding of the case study.

Running head: UBER TECHNOLOGIES
Table of Contents
Executive Summary...................................................................................................................2
Introduction................................................................................................................................4
5 year forecast steps...............................................................................................................4
Rationale behind DCF................................................................................................................5
Intrinsic value per share.........................................................................................................7
Historical Beta........................................................................................................................7
WACC....................................................................................................................................7
Relative Valuation Analysis...................................................................................................8
Sensitivity Analysis....................................................................................................................8
Conclusion..................................................................................................................................8
References................................................................................................................................10

Running head: UBER TECHNOLOGIES
Introduction
Uber as a company also possesses, the service hailing, food delivery and provides the micro
mobility with bikes and scooty. Covering over 785 metropolitan areas worldwide the
company is originated from San Fransisco. Uber can be used in two ways namely through its
website and applications available on Mobile Phone. The revenue of the company is currently
at US$11.27 billion for the financial year 2018. With the team of 22263 worldwide the
company is serving a lot of the users. In the United States, a 67% market share for sharing the
ride in early 2019. The National Bureau of Economic Research estimated that, in 2015, Uber
had accounted for $6.8 billion in consumer surplus (Uber Technologies MS, 2018).
5 year forecast steps
The forecast for Uber technologies have been done with respect to the financial statements,
available on Bloomberg. The five year forecasts are taken from the balance sheet and
thereafter the DCF model is applied to get an insight of the intrinsic value of Uber
Technologies. The data has been accessed from the excel file where the balance sheet and the
income statement of the company has been provided already. Secondly, the growth rate has
been decided long which the operating profit will move for the next five years. The tax has
been deducted from the profits to arrive at post tax profit figure (Maadani & Motamedi,
2016).
Further the depreciation has been calculated and added to the profits; simultaneously the
working capital is deducted along with the capital expenditure. The free cash flows are
measured to identify how much cash can be generated after accounting for the capital
expenditure such as purchase of plant, machinery or equipment. The FCF are given the