Why is it not FAANGU?
I’d just bet on FU and call it the day.
Suddenly everyone including Jim Cramer and @manch are banging uber
Loss of pricing power is the word I am reading all around. Can UBER keep its pricing power for too long? Read that Ola, an Indian company, is entering London market, apparently to fill in the space that UBER may vacate (very unlikely though).
Just go read the Uber P&L. You’ll realize the gross margin is worse than Toyota. Also, it takes a ton of staff to run the operation, so there are massive expenses below the gross margin line. It’ll never be profitable.
They’d have to dramatically increase prices (customers will leave) or pay drivers less. If anything, they will have to pay drivers more. They already offer all sorts of incentives. It’s why they were going after self-driving cars. Their prospectus even said that lack of self-driving cars was an existential risk to the company.
They only publish customer statistics. I’d love to see the driver churn numbers. I think people would realize they are going to churn through all the potential drivers, and their only option will be to increase pay.
The growth rate in the core ride sharing business has been decelerating for awhile. That means they won’t grow their way to net profits by leveraging their OPEX expenses. They are trying to distract from that by adding food delivery, bikes, and other unprofitable businesses. The problem is none of them are truly scalable in a profitable way. They aren’t Instagram or WhatsApp scaling with a team of under 100.
The growth rate distracted from the fact the business model is fundamentally broken and not scalable in a profitable way.
Good Analysis. The above is going to be true for everyone (lyft, ola) though. The factor cost of doing business is same for every business unless one of them is smarter to come up with way to get more out of same cost or raise prices. In other words, they have to beat either through cost (like Walmart), or product differentiation (whole foods).
Exactly. That’s why autonomous cars are the key to the race. It’ll lower the cost by not having to compensate a person for their time spent driving. I suspect this generation will go bankrupt before it happens similar to the first generation of dotcoms. Once autonomous cars are available, someone will revisit the idea.
Autonomous cars are a hoax. And if Uber has to buy and maintain them, where will they get the money? Right now it costs them nothing and the Uber slave drivers make $5/hr after paying for these cars.
That’s why I never understood the business model of Waymo. It seems they wanted to own the cars. That takes a crazy amount of capital.
I think Uber’s plan is people would buy an autonomous car then sign it up for Uber rides when they aren’t using it. I could see that business model working, but that is going to take at least a decade.
Good point. Either they pay for the drivers. Or pay for the expensive machines. At the end, personal mode of transportation is going to be proven most efficient and most desired. Sorry to break this new to public transport enthusiasts. Actually, car haters and parking haters count uber cars as 0.7 car and they claim roads are clogged in san Francisco due to these cars (uber/lyft).
May be sell customers’ profile
Lastly, don’t worry, SoftBank has invested heavily in Uber. They did pretty well investing in WeWork. Trust SoftBank.
Switch the business model to ebikes and scooters. Money makers
I think SoftBank has investments in Ola too. They are everywhere.
I always thought the asymmetrical challenge to Amazon’s e-commerce stronghold is a collection of brick and mortar linked together by easy delivery service. Google sort of half heartedly started the shopping service but in signature google fashion didn’t really see it through. Maybe Uber can finally make it happen?
It’s a decentralized model vs Amazon’s centralized approach. Could be very interesting.
In order to make it happen though it needs more than delivery service. How do customers discover what’s available and how do merchants keep track of inventory also need to be solved. Could be a huge opportunity if Uber delivers.
The solution requires a centralized approach …
Yup. Where you centralize vs where your decentralize is the art of strategy. There is this wise saying:
There are only two ways to make money: bundling and unbundling.
Of course where you bundle vs unbundle is left as an exercise to the readers.
Amazon is not a bunch of brick and mortar linked together. Nor is Amazon is a glorified delivery service. It is a supplier of merchandise directly from the warehouse.
AMZN e-commerce strengths are plenty of choices and speedy order fulfillment
Anyhoo, retailers are rushing to meet the unreasonable demand of millennials of delivering products to them anywhere anytime in the shortest possible time. Giant retailers like AMZN should be able to do that organically. Smaller retailers would need to depend on third party. Can Uber reasonably expect that they can do that better than independent third parties focusing on delivering only?