Author Topic: 1 Big Red Flag for Uber as Its IPO Approaches  (Read 56 times)

YELLO

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1 Big Red Flag for Uber as Its IPO Approaches
« on: October 25, 2018, 01:44:02 PM »
The ride-sharing champion has big plans to hit the public markets next year, but growth in the U.S. seems to be grinding to a halt.

Uber's massive valuation has long been premised on the huge opportunities in ridesharing and beyond as autonomous vehicles eventually become standard. The company has put up giant growth numbers as it aggressively expanded its ridesharing business and used that as a platform to reach into satellite services. These include Uber Eats, which delivers food; Uber Freight, which connects shippers with carriers; and Uber Elevate, for urban air transport. The company is also investing in futuristic technologies like self-driving cars and drone delivery.

However, it looks like Uber's growth has slowed significantly in its core business in the U.S. According to data from market research company Second Measure, Uber's U.S. sales have essentially been flat since March.

Based on Second Measure's index, Uber's sales rose from 162.5 in March to just 163.6 in September, an increase of less than 1%. Growth in the overall ridesharing market also slowed, but Lyft continued to gain share on its rival, as its sales rose from 59.4 to 66.5 (again, using the index numbers) from March to September, representing 12% growth. Its market share grew from 26% to 28%, while Uber's fell from 71% to 69%.

Both Uber and Lyft are still unprofitable, and are racking up sizable losses. Uber lost a whopping $891 million in the second quarter of this year, following a loss of $4.5 billion last year and $2.8 billion the year before that.

The company with the leading rideshare app has said it won't be profitable for at least three years. And at this point, turning profitable will require shedding loss-generating futuristic divisions like its autonomous-vehicle unit, or some fantasy math about future growth and new businesses. If Uber's revenue growth were accelerating, the three-year profit target would be more credible, but revenue growth is clearly moving in the wrong direction.

For the current year, Uber sees revenue of $10 billion to $11 billion, up from $7.78 billion a year ago, representing growth of 29% to 41%. In 2017 gross revenue growth was 85%. The rate is likely to slow again in 2019, as rideshare markets continue to mature. Investors can stomach losses from a company with blockbuster growth numbers, but once that growth slows, the music stops as the path to profitability essentially disappears.

Uber has opportunities beyond ridesharing, but aside from autonomous vehicles -- where its only advantage seems to be its rideshare network -- none of them look particularly big. Neither Uber Eats, which is trailing the $10 billion Grubhub, nor Uber Freight would justify a $120 billion valuation. Meanwhile, Lyft continues to nip at Uber's heels, gaining market share, and ensuring that prices in ridesharing remain so low that it isn't really profitable for either company.

Lyft can at least please investors by taking share from Uber. Uber, on the other hand, doesn't seem to have anywhere to go in ridesharing but down -- barring a sudden breakthrough in autonomous vehicles, which looks unlikely. The company's U.S. ridership seems to be plateauing, overall revenue growth is slowing, and its brand is still tarnished from the company's recklessness under former CEO Travis Kalanick. If Uber's IPO prices at a $120 billion valuation, it seems destined to be a flop.

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.fool.com/amp/investing/2018/10/25/1-big-red-flag-for-uber-as-its-ipo-approaches.aspx&ved=2ahUKEwiYkN3CjqLeAhVnrlkKHYdTCtAQyM8BMAB6BAgAEAQ&usg=AOvVaw1o9wYDXKXx19Z91w9f-KW6&ampcf=1

YELLO

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Re: 1 Big Red Flag for Uber as Its IPO Approaches
« Reply #1 on: October 29, 2018, 04:23:33 PM »
 
Uber and Lyft competitor Via expanding services to Arlington County
Via is the latest ride-sharing app attempting to compete with juggernauts Uber and Lyft with an expansion of its services into Arlington County.
During the rollout, all rides picked up or dropped off in Arlington will be capped at $4.

Via says its model makes rides more efficient, cutting down on lengthy detours that take riders out of their way and allowing for more passengers to be transported in fewer overall vehicles.

https://www.google.com/url?sa=t&source=web&rct=j&url=https://wtop.com/news/2018/10/uber-and-lyft-competitor-via-expanding-services-to-arlington-county/amp/&ved=0ahUKEwjy0oDPvKzeAhUlneAKHec6CaQQyM8BCCUwAA&usg=AOvVaw1eYhXDVJWxmVP2mC-dVKBA&ampcf=1