In our second of seven Stockpicking Challenge matchups, the mover of people squares up against the mover of satellites.
March 6, 2024
One is moving people and the other is moving satellites. Which will be the better mover of stock returns?
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Our second head-to-head matchup is in the transportation sector, between Uber Technologies (NYSE: UBER) and Rocket Lab (Nasdaq: RKLB).
Ridesharing has become increasingly popular across the globe, with Uber emerging as the leader in this winner-take-most market. Several competitors have undertaken ridesharing apps or automotive taxi networks, yet none have reached the scale achieved by Uber.
The space economy is also lifting off, with several analysts predicting it will become a trillion-dollar new industry. With huge capital costs and enormous barriers to entry, Rocket Lab is rising up as the launch provider of choice who’s about to begin carrying much larger payloads.
Do you think the rideshare app king or the satellite launch disruptor is the better stock to invest in during 2024?
Cast your vote in our poll below! We provide commentary on each of these companies, and we’ll include the one that receives more votes in our 7investing Stockpicking contest portfolio!
Our 2024 7investing Stockpicking Competition is now underway!
Submit your own stock ideas to win a $1,000 Amazon gift card and a free year of both @7investing and @stockcardhq!https://t.co/mXC33QQtX5
We'll also submit a 7investing entry into the contest for fun — which…
— 7investing (@7investing) March 6, 2024
2023 Total Return: 149%
2024 YTD Return (as of 3/5/24): 32%
When it comes to ridesharing apps, Uber is in the driver’s seat.
Founded in 2009, Uber’s ridesharing app quickly disrupted the transportation world. It allowed users to book a ride from anywhere and allowed drivers to use their cars to easily set up a side-gig to make some extra cash. Today, Uber has 150 million monthly users and books 10 billion trips worth $138 billion in annual fares. For its service, Uber takes a 25% cut of the total fare — and it booked $37 billion in revenue during 2023.
Uber aggressively and unapologetically launched in all corners of the world, giving it the first-mover advantage but also putting it in the crosshairs of lawyers and regulators. The company has been involved in a four-year legal battle with California debating whether its drivers should be classified as independent contractors or company employees – and similar lawsuits have been filed in Massachusetts, New Jersey, New York, and Switzerland. Uber agreed along with Lyft last year to pay $328 million based on allegations that they withheld wages from drivers, and its co-founder and initial CEO Travis Kalanick has been widely criticized of creating a misogynistic corporate culture with numerous allegations of sexual harassment.
Despite all of the controversy, Uber went public on its tenth birthday in a high-profile IPO that valued the firm at $80 billion. Shares have hit plenty of speedbumps along its journey, yet Uber has effectively doubled its early investors’ money during the past five years in the public markets.
Now a cash flow gushing machine, Uber increased its free cash flow by an order of magnitude last year — generating $3.4 billion in 2023 (up from $390 million in 2022). While ongoing litigation and increasing competition seem certain, investors still continue to applaud Uber’s massive global scale and its scalable business model. Its current CEO Dara Khosrowshahi took the helm in 2017, and he’s quite competently turned the ship around and silenced Uber’s critics.
2023 Total Return: 46%
2024 YTD Return (as of 3/5/24): (20%)
The space economy is reaching a higher orbit, and that could be quite rewarding for its earliest investors.
Between international conflicts, a growing need for broadband internet, and new commercial opportunities, a trillion-dollar industry is taking shape in Earth’s orbit. More than 40,000 satellite applications — from Starlink, Amazon, and several other commercial customers — are awaiting the FCC’s pending approval. That means there’s a huge demand for setting up shop in outer space.
Rocket Lab is emerging as the disruptor of the space economy. Initially a small satellite launch provider, it has greater ambitions of becoming an end-to-end space company who can carry larger payloads, manufacture satellites, and manage their communications and operations over time.
Rocket Lab is also winning larger deals with the American government’s Department of Defense. Last year’s $14 million contract for tracking hypersonic missiles through its new Responsive Space Program paved the way for an even more massive $515 million contract with the US Space Development Agency for the design, manufacture, delivery, and operations of 18 different space vehicles over a ten year period.
The company’s rocket scientist CEO Peter Beck is not afraid to get his hands dirty and don the hard hat to build bigger rockets and serve more demanding customers. Credibility and long-term relationships are vitally important in the launch industry. Rocket Lab is gaining both…at an accelerating pace.
The sky is the limit for this disruptor, who is growing quickly in a massive and mostly unexplored new market.
Will Uber Technologies or Rocket Lab be the better investment for our long-term portfolio to own? Cast your vote in our live poll below!
Our 2024 7investing Stockpicking Competition is now underway!
Submit your own stock ideas to win a $1,000 Amazon gift card and a free year of both @7investing and @stockcardhq!https://t.co/mXC33QQtX5
We'll also submit a 7investing entry into the contest for fun — which…
— 7investing (@7investing) March 6, 2024
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