Bubbles and Blackwater: A Stock Appraisal

Now, some folks claim that progress is a relentless tide, sweeping all before it. I’ve seen tides. Mostly they sweep up seaweed and lost wallets. But let’s talk about Uber, shall we? A company that, not so long ago, was merely a fever dream of app developers and venture capitalists, a way to summon a carriage with a glowing rectangle. It’s created a category where none existed, a bit like inventing the need for slightly damp sponges. And it’s grown, quite impressively, to a market capitalization of $177 billion. Shares soared 35% in 2025, which, in the grand scheme of things, is roughly equivalent to discovering a new shade of beige and declaring it revolutionary.

Then we have Coca-Cola. Not exactly a whirlwind of innovation, is it? More of a… steadfast presence. Like a particularly stubborn garden gnome. It’s been around for well over a century, a testament to the enduring power of sugary water and marketing. A total return of 16% in 2025. Respectable, certainly. But it lacks the… frisson of something genuinely, dangerously new. It’s the sort of company your grandfather invested in, and then told you about at length, whilst simultaneously questioning the merits of your ‘digital doodads’.

Each stock, naturally, has its merits. The question, as always, is which one offers the best return on investment. Or, to put it another way, which one is less likely to vanish in a puff of logic when the market decides it’s had enough of ‘disruptive’ technologies?

Network Effects and the Illusion of Growth

Uber’s ride-hailing services are, allegedly, in 15,000 cities. A number that sounds impressive until you realize that roughly half of those are hamlets with a single taxi and a very confused driver. But growth isn’t finished, oh no. Bookings were up 20% in Q3 (ended Sept. 30) to $25.1 billion. The delivery division, too, surged 25% year over year. A 20% gain in overall revenue. Numbers that, frankly, smell suspiciously like… accounting.¹

The leadership team sees opportunity for increased adoption. In the US, only 15% of the adult population uses Uber’s services. A statistic that suggests either a massive conspiracy against ride-sharing, or that the other 85% have simply figured out that walking is good for you. There’s also potential for cross-selling. People who use both mobility and delivery spend three times more. Which is, of course, precisely what any sensible company would want. More money. From the same people. It’s the economic principle of ‘more is always better’, elegantly disguised as ‘customer service’.

Uber’s launched adjacent revenue streams. Advertising operations collected run-rate sales of $1.5 billion in Q1 2025. Businesses want to leverage the data Uber has access to. A perfectly reasonable desire, really. It’s like having a map of everyone’s habits and desires. What could possibly go wrong?²

Uber’s built up powerful network effects. More riders and drivers mean a stronger ride-hailing segment. More consumers, couriers, and restaurants mean the same for mobility. It’s a positive feedback loop. A self-reinforcing cycle of… well, of Uber getting more money. It’s essentially solidified their competitive position. Or, as the alchemists of Wall Street would say, ‘turned lead into gold‘.

Impressive Profitability and the Art of Persuasion

Coca-Cola doesn’t post huge growth numbers. It’s an extremely mature enterprise with a ubiquitous presence. It owns over 200 beverage brands. 2.2 billion servings are consumed daily. Expanding from that base is… challenging. It’s like trying to add another drop to an ocean. Pointless, really.

But the company’s brand is its most valuable asset. Customers have an affinity for it, driven by a superior marketing strategy. Disruption or obsolescence aren’t concerns. Coca-Cola can consistently raise prices. Consumers will pay. It’s a testament to the power of suggestion. A carefully crafted illusion.³

Coca-Cola leans on third-party partners for bottling and distribution. It results in sizable profits. An operating margin of 33% through the first nine months of 2025. Remarkable, really. It’s like having a machine that turns sugar water into gold. Only slightly less ethically questionable.

It leads to copious amounts of free cash flow. Coca-Cola returns excess cash to shareholders in the form of dividends. 2026 will be the company’s 64th straight year of increased payouts. A phenomenal streak. A Dividend King. It’s the sort of stability that makes accountants weep with joy.

Capital Appreciation or Income? A Question of Priorities

Both Uber and Coca-Cola are high-quality companies. The one investors buy depends on their preferences. If you care about a steady and growing income stream, Coca-Cola is the top choice. Shares trade at a reasonable forward P/E ratio of 21.7. It’s a safe bet. A predictable return. Like investing in a slightly more fizzy savings account.

I tend to focus on capital appreciation. I have a long time horizon. That’s why I believe Uber is the better stock. It’s surprising to learn that Uber’s forward P/E multiple of 20.3 is cheaper. Coca-Cola is the safer company. But Uber’s potential to rapidly grow its earnings represents significantly more upside. It’s a riskier bet. But the potential reward is far greater. It’s like betting on a slightly faster horse.

Accounting, of course, is the art of making numbers dance to your tune.
Data is power. And power, as any historian will tell you, is rarely used for good.
Marketing is the art of convincing people they need things they don’t.

2026-01-17 18:12

Network Effects and the Illusion of Growth

Impressive Profitability and the Art of Persuasion

Capital Appreciation or Income? A Question of Priorities

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