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I've invested in uber so here's my take - If uber leaves growth mode and makes smarter investments in new services/markets, they can be profitable. They have p

I've invested in uber so here's my take - If uber leaves growth mode and makes smarter investments in new services/markets, they can be profitable. They have positive margin on ridesharing in most markets. I believe uber eats could also earn money in the short term. And I want them to continue investing in last-mile delivery (which I believe they have canceled for now). Even though eats isn't earning a lot now, I believe that once all the money-burning food delivery startups go out of business and the market price for food delivery is no longer so depressed, it's a solid business Uber can make money on. I would prefer Uber just switch the business off in markets where it's impossible to turn a profit and just restart the networks/ecosystem once delivery prices normalize, but Uber is uniquely strong here because they are the only food delivery platform to also have a huge driver network they can easily tap into. Last mile delivery is also very synergistic with their business and IMO it's just something they need to spend time on getting right and building relationships with big partners. Once this, eats, and rideshare are all working well together you have a really synergestic business. I think if Uber can pass on the efficiency/demand gains from these three products working in tandem to drivers, they can also work towards building a stronger moat around their network. AV is the big unknown. However I find it much more plausible that Waymo and Tesla will vendor out the details of the rideshare service rather than build their own from scratch. Going from scratch is kind of risky, because it makes the whole venture dependent on the success of the vertical and requires good execution on getting people to actually use the service - it's much safer to simply sell the tech to automakers, rideshare, etc. since we know there is already demand for it there (I think there are also brand implications to Waymo/Google/Alphabet and Tesla that will make them hesitant to vertically integrate). Uber is of course also working on AV and in their case, they already have the messy business side of that vertical figured out, so I think their upside is a lot higher.

latchkey 7y ago
tl;dr: I've invested in uber so I'm going to give 4 paragraphs of bullish TA.
- opportune 7y ago
  Well, I wouldn't have invested if I weren't bullish. Also this isn't TA: https://www.investopedia.com/terms/t/technicalanalysis.asp https://www.investopedia.com/terms/t/technicalanalysis.asp
clairity 7y ago
> "I believe uber eats could also earn money in the short term." uber eats isn't a revenue play, so investors shouldn't expect any real margin contribution from it. instead, it's meant to protect the flanks--to control supply-side costs for rideshare and provide some risk mitigation through product diversification.
- opportune 7y ago
  That's fair. To be clear I don't expect it to be a huge money maker in the short term, just something that's worth doing. Long term the margins look much better once the food delivery market starts to see some consolidation/higher margins due to less promotions and subsidies. Very good point on the supply-side costs for rideshare, hadn't thought of that.
  - clairity 7y ago
    even long-term, it's tempting to think that synergies and market consolidation would lead to higher utilization rates through stacking (making multiple delveries at once), but indications from current players in the space are discouraging in that regard. last-mile logistics is an exceedingly tough nut. i think it's really going to take a wholesale reconfiguration of cities around much more density and mixed-use where shared industrial kitchens and warehouses can make the synergies work out, but of course that's decades in the making.
    - deminature 7y ago
      >i think it's really going to take a wholesale reconfiguration of cities around much more density and mixed-use where shared industrial kitchens and warehouses can make the synergies work out, but of course that's decades in the making. It's actually closer than it seems if this bet plays out: https://www.cloudkitchens.com/ https://www.cloudkitchens.com/
      - clairity 7y ago
        yes, that's the easiest part and where there has been some activity, but even then, it's a capital-intensive business without obvious super-scalar competitive advantages. shared industrial kitchens become advantageous only with density, proximity (mixed-use), and (unfortunately) high land values.
legolas2412 7y ago
> However I find it much more plausible that Waymo and Tesla will vendor out the details of the rideshare service rather than build their own from scratch. Yeah, but that puts all value add in waymo or Tesla's hands, not Uber's. Uber will have no advantage, and cannot charge juicy margins.
- valuearb 7y ago
  Uber will have the largest network of customers and that’s far from trivial to build. It easily costs $2+ per customer to get your app installed on their phone, and takes years to get hundreds of millions of installs.
  - lefstathiou 7y ago
    If we can agree that switching costs are low for users, and that the cost of building an autonomous vehicle fleet is very large, then the advantage goes to Google who has both a huge distribution machine (owning Google Maps) and massive amounts of free cash flow to deploy. They could purchase 100k vehicles in a blink of an eye, outfit them with AI, deploy in NYC Chicago Atlanta Austin LA and bam users will convert. They don't need to cover the globe, just the absolute most lucrative cities (which Uber relies on to subsidize smaller cities). Additionally, I am not convinced the transition from largest taxi service to AV will be smooth sailing from a personnel perspective. Not having to manage the politics of a deeply embedded global supply chain is one of Tesla's advantages relative to big auto. At some point, drivers may say F* this in dealing with Uber which Google avoids from the get go.
- Jommi 7y ago
  The consumers are in Ubers pocket. Wayne and Tesla will be smooching to be Uner's chosen one. Businesses are demand based, not supply based.
  - windexh8er 7y ago
    I'm not sure you're considering how fickle riders are. I work in a (what used to be) high travel group of tech. Most all of my peers and I are heavy rideshare users. Honestly, we don't care who the app owner is, but want the rides to be consistent and reliable. None of my peers is tied to Lyft or Uber, even with promotions and "status" gimmicks. If a ride can show up 3 minutes faster on Lyft - I'm taking that over Uber. To say the consumers are in Uber's pocket is ill informed. If you're taking hundreds or thousands of rides a year and aren't paying for any of those rides - the ride share company has little to no bearing on your choice. It's not like flying an airline where there's significant advantages to reap.

latchkey 7y ago

tl;dr: I've invested in uber so I'm going to give 4 paragraphs of bullish TA.

opportune 7y ago
Well, I wouldn't have invested if I weren't bullish. Also this isn't TA: https://www.investopedia.com/terms/t/technicalanalysis.asp https://www.investopedia.com/terms/t/technicalanalysis.asp

clairity 7y ago

> "I believe uber eats could also earn money in the short term." uber eats isn't a revenue play, so investors shouldn't expect any real margin contribution from it. instead, it's meant to protect the flanks--to control supply-side costs for rideshare and provide some risk mitigation through product diversification.

opportune 7y ago
That's fair. To be clear I don't expect it to be a huge money maker in the short term, just something that's worth doing. Long term the margins look much better once the food delivery market starts to see some consolidation/higher margins due to less promotions and subsidies. Very good point on the supply-side costs for rideshare, hadn't thought of that.
- clairity 7y ago
  even long-term, it's tempting to think that synergies and market consolidation would lead to higher utilization rates through stacking (making multiple delveries at once), but indications from current players in the space are discouraging in that regard. last-mile logistics is an exceedingly tough nut. i think it's really going to take a wholesale reconfiguration of cities around much more density and mixed-use where shared industrial kitchens and warehouses can make the synergies work out, but of course that's decades in the making.
  - deminature 7y ago
    >i think it's really going to take a wholesale reconfiguration of cities around much more density and mixed-use where shared industrial kitchens and warehouses can make the synergies work out, but of course that's decades in the making. It's actually closer than it seems if this bet plays out: https://www.cloudkitchens.com/ https://www.cloudkitchens.com/
    - clairity 7y ago
      yes, that's the easiest part and where there has been some activity, but even then, it's a capital-intensive business without obvious super-scalar competitive advantages. shared industrial kitchens become advantageous only with density, proximity (mixed-use), and (unfortunately) high land values.

legolas2412 7y ago

> However I find it much more plausible that Waymo and Tesla will vendor out the details of the rideshare service rather than build their own from scratch. Yeah, but that puts all value add in waymo or Tesla's hands, not Uber's. Uber will have no advantage, and cannot charge juicy margins.

valuearb 7y ago
Uber will have the largest network of customers and that’s far from trivial to build. It easily costs $2+ per customer to get your app installed on their phone, and takes years to get hundreds of millions of installs.
- lefstathiou 7y ago
  If we can agree that switching costs are low for users, and that the cost of building an autonomous vehicle fleet is very large, then the advantage goes to Google who has both a huge distribution machine (owning Google Maps) and massive amounts of free cash flow to deploy. They could purchase 100k vehicles in a blink of an eye, outfit them with AI, deploy in NYC Chicago Atlanta Austin LA and bam users will convert. They don't need to cover the globe, just the absolute most lucrative cities (which Uber relies on to subsidize smaller cities). Additionally, I am not convinced the transition from largest taxi service to AV will be smooth sailing from a personnel perspective. Not having to manage the politics of a deeply embedded global supply chain is one of Tesla's advantages relative to big auto. At some point, drivers may say F* this in dealing with Uber which Google avoids from the get go.
Jommi 7y ago
The consumers are in Ubers pocket. Wayne and Tesla will be smooching to be Uner's chosen one. Businesses are demand based, not supply based.
- windexh8er 7y ago
  I'm not sure you're considering how fickle riders are. I work in a (what used to be) high travel group of tech. Most all of my peers and I are heavy rideshare users. Honestly, we don't care who the app owner is, but want the rides to be consistent and reliable. None of my peers is tied to Lyft or Uber, even with promotions and "status" gimmicks. If a ride can show up 3 minutes faster on Lyft - I'm taking that over Uber. To say the consumers are in Uber's pocket is ill informed. If you're taking hundreds or thousands of rides a year and aren't paying for any of those rides - the ride share company has little to no bearing on your choice. It's not like flying an airline where there's significant advantages to reap.