Uber Bleeds Green!
Uber is touted as the most valuable privately held company in the world at the moment, but thus far it has failed to make money. In fact, it is bleeding the green stuff at a rate of over US$150 million per month. According to the shareholders report, the total losses for this year alone is US$1.27billion.
Much of the losses came from the activities in the Chinese market, where fierce competition from Didi saw driver subsidies and massive advertising create a financial black hole for Uber in that territory. The fledgling ride-sharing company has since plugged that particular hole by selling its Chinese operation to its competitor for an 18% share of the Chinese market, a move that may well be one of the most astute business deals of the century.
Even though Uber has moved to stem losses in China for them to achieve profitability – and hence the ability to move to an IPO – it will still have to address matters in the US of A, where it has racked up losses of US$100 million this year. According to many experts, these losses are unprecedented; even in the heady days of the dotcom bubble, companies like Amazon, which was famous for chasing market share whilst losing money, only managed to rack up a US$1.4 billion loss for the year of 2000.
This does of course beg the question as to why Uber is seen as the most valuable privately held company at present, when to date it has burned its way through at least US$4 billion dollars in the past seven years. Much of the answer comes from the market share it has amassed during that time, which according to Uber stands at about 85% of the US market. The only company that comes close is Lyft, which claims to have about 20% of selected markets. Uber is also famously looking to the future, with the likes of Toyota and Volvo, and will launch an autonomous ride-sharing service in Pittsburgh this year.
Of course much of the value of Uber is the potential for the new disruptive technology to gain traction and become the first choice for the future. One of its key benefits is that as a traveller, one can go to just about any country worldwide now and get a taxi with ease, just like one would back home, using the same smartphone app. Apart from the question of where and how much tax Uber should pay, there is still a big question that has to be answered – and that is just what are all of the out-of-work taxi drivers going to do in the future.
top image: gizmodo