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Uber Lights Up a Bud and Takes a Drag
We’ll tell you the song we stole that line from in a minute as The Juice takes this week’s big news on Uber (UBER) beyond the headlines.
Source: The Globe and Mail
On the surface, this data from Canada’s The Globe and Mail on the widening wealth gap between renters and homeowners in the country looks scary.
But if you read between the lines, it’s not.
First, the net-worth discrepancy considers only Canadians born between 1955 and 1964.
Second, as The Globe and Mail article points out:
There is rising homeownership among… millennials of ages 25 to 34. These younger homeowners have relatively high incomes – but also loads of debt.
A Canadian conundrum similar to the one The Juice often explores stateside: Would you rather rent and have ample cash on hand to invest in stocks and crypto OR be a house-rich, cash-poor homeowner servicing loads of debt with home equity you probably can’t touch without taking on even more debt?
Net worth – driven largely by home equity – isn’t the be-all, end-all measure of financial well-being.
In the U.S., the best-positioned renters, even in expensive cities, spend a relatively small fraction of their income on rent. In Canada, where the rise in rents and housing prices is on par with the U.S.’, we suspect a similar dynamic.
You have a good job. You’re flush with cash. You can easily afford a $3,500 apartment in the city center. Why bite off more than you can comfortably chew by taking out a loan on, say, a $1 million property, easily doubling your housing expense?
All in the name of net worth.
Might not make much sense when you can take that surplus cash flow and funnel it into stocks, crypto, and other investments. In fact, you can invest in real estate without even becoming a property owner.
Just alternative food for conventional thought as you – or someone you know – navigate these crazy American and Canadian housing markets.
Speaking of Canada…
Uber made big news there this week. Scroll with us as we consider if this move makes Uber stock a buy.
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Can Canada Get Uber High?
This week, the headlines incessantly blared ”Uber Eats to Deliver Weed in Toronto.” Chill story. But The Juice saw little more than surface-level analysis.
Before we dig deeper, the “Uber Lights Up a Bud and Takes a Drag” header plays on Bruce Springsteen’s 1995 acoustic hit that Rage Against the Machine turned into a metal cover in 1998. In the song “The Ghost of Tom Joad,” The Boss says, “Preacher lights up a bud and takes a drag.”
Now, Uber is wisely getting in on the weed game…
Following Amazon’s Playbook
…But it needs to do a better job.
Open the Uber app.
It looks a lot like Amazon (AMZN)’s platform in terms of offering many services (standard rides, hiring drivers by the hour, food, scooters, package delivery, groceries, car rentals, and, if you live in Toronto, cannabis delivery) and its Amazon Prime-like monthly subscription, Uber One.
Uber continues to regain its footing:
Last we heard from the company, it’s on track for its Q3 and 2024 growth targets. We’ll get an update when Uber reports earnings in a couple weeks. The Juice will be on the conference call.
We want to hear Uber tell investors it’s striking while the iron is hot. That this Toronto experiment is the beginning of bold, innovative, and creative moves. More pushing the envelope the way the company did when it pissed off city after city by aggressively disrupting the taxi industry.
For starters, we want to hear it’s expanding weed delivery into major U.S. cities.
Beyond that, Uber needs to do a better job becoming part of your daily life in multiple areas. Just like Amazon’s done via Prime membership.
Specifically, Uber needs to capture the rider’s imagination and effectively occupy their idle time in the backseat. Every one of us is glued to our phone screen when sitting in an Uber.
So why not do some research and target groups of users?
We could come up with ideas all day. But we’ll wait to see what Uber says about its plans to permeate its riders’ lives – assuming it has these plans – when it reports Q3 earnings on November 1.
The Bottom Line: Amazon came up in a time when earnings didn’t seem to matter much to tech investors. We bought the stock because Jeff Bezos had a clear plan for – and path to – dominance. It wasn’t all about growth. It was all about growth and incredible execution.
Uber must show us it can do likewise.
That this Toronto move isn’t a one-off designed to grab headlines, but a harbinger for things to come. An expansion of services that puts the company right up there with Amazon, Starbucks, Apple (AAPL), and the other tech heavy hitters we think of and maybe give money to multiple times a day. Not just when we need a ride.
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