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They have been going a decade, they havent turned a profit yet, in fact they have been burning through capital. What is going to change in the next decade that

They have been going a decade, they havent turned a profit yet, in fact they have been burning through capital. What is going to change in the next decade that means they will return a profit consistently enough that either dividend payout will occur or a higher share price will be achieved? Seems to me that as soon as Uber find out how to turn a profit thats when copycats can jump on board with their app and start taking a slice of ubers cake. Afterall they wont have long term investors to repay so their prices could be lower than Ubers, making the value proposition of uber even worse.

djakjxnanjak 8y ago
What makes you think they are even trying to make a profit? Uber has investors willing to throw billions at them to spend on growth, why wouldn’t they take it?
- bduerst 8y ago
  Going public means a different strategy for the board. Up until this point Uber has been a hot investment ticket for VCs, and the existing investors have been incentivized to pump up the valuation to improve their position. This strategy involves self-driving cars and helicopters and edgy vaporware - basically creating these tactical hype moments for the Uber brand. Now with public investors, the hype strategy isn't sustainable and the board will need to turn a profit (eventually) or be ousted by public owners who don't want to see their shares in a company be destroyed.
- kopos 8y ago
  Going public brings a different set wof eyes to the table and more scrutiny and lesser patience from the public. That’s why. The story of being a loss leader is not taken kindly
sonnyblarney 8y ago
To be fair it's the unit economics that you'd want to look at, not the timeframe. If their goal is to go very global, very quickly, it'll take more than a decade of burn. If the unit numbers work in established cities, and they are spending on direct expansion, then it's good. That said, much of their 'expansion' has been into other things, and their unit economics are questionable, though on the later ... when Lyft and Uber settle down into a nice duopoly in most cities prices will inch up a little bit if need be.
- notahacker 8y ago
  A big question is whether the unit economics of ride hailing in their currently profitable cities are a best case scenario, which seems plausible (US taxis are by most accounts unusually restricted, expensive and lacking in alternatives compared with transport in most of the rest of the world and US consumers much richer than average, and the Uber brand isn't necessarily the same asset in other markets either). Which raises the question of whether they'll ever get a return on more difficult to penetrate and competitive markets.
  - sonnyblarney 8y ago
    Yes, that's the big question. I believe that they do provide value, and have kind of a network and brand effect. I believe there's some margin for Lyft/Uber to exist. How big it will be? Who knows. Maybe not enough to support their gigantic valuation, but probably some valuation. I think many of these IPO's are simply way overvalued and are going to have trouble maintaining value. They might crash if there is a stock market tumble as the wind comes out their sales. The difference between now and 2000 however is that these are actually viable business at least on some level.

djakjxnanjak 8y ago

What makes you think they are even trying to make a profit? Uber has investors willing to throw billions at them to spend on growth, why wouldn’t they take it?

bduerst 8y ago
Going public means a different strategy for the board. Up until this point Uber has been a hot investment ticket for VCs, and the existing investors have been incentivized to pump up the valuation to improve their position. This strategy involves self-driving cars and helicopters and edgy vaporware - basically creating these tactical hype moments for the Uber brand. Now with public investors, the hype strategy isn't sustainable and the board will need to turn a profit (eventually) or be ousted by public owners who don't want to see their shares in a company be destroyed.
kopos 8y ago
Going public brings a different set wof eyes to the table and more scrutiny and lesser patience from the public. That’s why. The story of being a loss leader is not taken kindly

sonnyblarney 8y ago

To be fair it's the unit economics that you'd want to look at, not the timeframe. If their goal is to go very global, very quickly, it'll take more than a decade of burn. If the unit numbers work in established cities, and they are spending on direct expansion, then it's good. That said, much of their 'expansion' has been into other things, and their unit economics are questionable, though on the later ... when Lyft and Uber settle down into a nice duopoly in most cities prices will inch up a little bit if need be.

notahacker 8y ago
A big question is whether the unit economics of ride hailing in their currently profitable cities are a best case scenario, which seems plausible (US taxis are by most accounts unusually restricted, expensive and lacking in alternatives compared with transport in most of the rest of the world and US consumers much richer than average, and the Uber brand isn't necessarily the same asset in other markets either). Which raises the question of whether they'll ever get a return on more difficult to penetrate and competitive markets.
- sonnyblarney 8y ago
  Yes, that's the big question. I believe that they do provide value, and have kind of a network and brand effect. I believe there's some margin for Lyft/Uber to exist. How big it will be? Who knows. Maybe not enough to support their gigantic valuation, but probably some valuation. I think many of these IPO's are simply way overvalued and are going to have trouble maintaining value. They might crash if there is a stock market tumble as the wind comes out their sales. The difference between now and 2000 however is that these are actually viable business at least on some level.