Uber floated on the stock market today. At $45 a share, the company is reportedly worth $82bn (or £63bn). As someone in the industry, I am not someone queuing to buy their shares. Not right now anyway. Uber says it does not expect to make a profit. Neither has it made a profit. In fact, in its ten-year history, Uber has made a loss of around $9bn! And they are still burning their way through cash pretty quickly.
Uber’s Increased Competition
As a digital disruptor, Uber has achieved a global presence. It has lost its first movers advantage though. This is thanks to competitors like Lyft, Ola and Gett (who receive a lot less negative publicity). More competition in the market has come from from suppliers of Taxi booking and dispatch software. In the UK, AutoCab already offers thousands of cars. They simply work as an aggregator, using its UK customer base of taxi companies.
Even more competition comes in the guise of AddisonLee. They were originally a London minicab operator but they grew through investment in bespoke software. Through the ownership of the Carlyle Group they even became an International fleet operator. So as Uber struggles with striking drivers, new regulations (like the Taylor Review) and questions over taxation, it is hard to see what investors are in investing in.
Making Sense Of Uber
To make sense of it all, you have to look back 25 years in time. Way back then, an online bookstore company called Cadabra Inc was setting up. The entrepreneurial owner actually started it in his garage at home, with a vision. Today it is better known as Amazon.com. Jeff Bezos (the founder) is a global figure for digital disruption. Along the way, Amazon diversified. They went from selling books to pretty much everything you can think of.
Uber is doing something similar as it transitions from a taxi company to a global transportation provider. It is an ambitious goal and astronomically costly. Maybe Uber’s real success relies on self-driving vehicles without them having to pay a driver’s wage? It also relies on humans not owning vehicles in the future. Just maybe though, if cars do eventually drive themselves, I would invest (if I’m not too old by then of course).