With the burn rate uber has, it'll be bankrupt in < 2 years. There are no other suckers to buy in after the public.
I'm basing that opinion on what I've seen in my city. When Uber and Lyft left Austin, there were lots of alternatives that had existed or popped up to fill the space.
Aside from brand recognition, what does Uber have that the others don't?
I tried to use one or two of those alternatives. Setup was a pain and I ended up taking a cab. I have at least one coworker who couldn't get a ride because he was in South Austin.
Additionally. if your company is only in one city, visitors have to know about, install, and setup a new app just so they can use you; it's just as easy for them to take a cab. Last time I needed a ride in DC, I used the Lyft app that was already on my phone. There was no friction in being in a different city.
Maybe there was a local alternative in DC, but who's going to look up local ride sharing companies and install yet another app when the app they already use at home already works? Even hailing a cab is easier than installing a new app for one or two rides while you're in a new city.
Uber and Lyft have network effects.
Regarding your second point whenever I travel internationally one of the first things I do before traveling is to search for rideshare <cityName> on the internet. Whatever pops up I just download that app and set up my payment before I even get there so I can seamlessly hail rides. Often there is a thread on TripAdvisor waiting for me that compares the options.
I hadn't expected to be in DC--My connecting flight was cancelled, so I needed a ride to the bus station. But I think if it had been planned, I would have Googled "is Lyft in DC?" and seen that I was all set.
Maybe I could save a few bucks by installing an alternative service, but it wasn't worth it to me to bother. (On the other hand, my price insensitivity is largely because I only take a Lyft/Uber about six times a year, so they might lose heavy users more quickly.)
I couldn't tell you what car sharing service any of my friends use.
When I was in Malta earlier this year, there was no Uber. I downloaded an app called Taxify while sitting at a cafe, and called a car from it. It's not a huge barrier to download and install another app, even when trying to call a car.
It doesn't matter if you know who uses it. It only matters that there are. People are more willing to drive for it if there are plenty of users. If there are more drivers, there's more likely to be one nearby when you request a ride, so service is better. Better service makes for more riders. More riders makes it more worthwhile to be a driver. Positive feedback loop based on network size = network effect.
> I downloaded an app called Taxify while sitting at a cafe, and called a car from it. It's not a huge barrier to download and install another app, even when trying to call a car.
You know what's even less of a barrier? Not having to download and install another app.
Maybe it's not a huge barrier to you, but you're a single data point. You're talking to a second data point that's telling you that if I have a ride-hailing app on my phone that works, I will choose it before I install another app, every time.
My belief is that most people will take the path of least resistance, just like I do. How confident are you that they won't?
Investing in it is basically a hail-mary that we'll get fully autonomous vehicles within the next couple of years, and even in that best-case scenario Uber would be a strong-but-not-world-eating company (the traffic problems would still exist, and operating costs would skyrocket in the short-term before they go down). I can't fathom how it's worth nearly $10 billion dollars. I almost want to short it.
Well then you'll really not fathom how it's worth $80 Billion. Which is it's actual market cap.
Uber is worth more than Ford and GM combined.
I haven't used a cab app. Are the taxi apps similar to Uber and Lyft's where it identifies the car and driver and you can track the location of that car on a map? Do drivers and passengers rate each other?
The only major difference with the taxi apps is that the drivers are first party instead of third party so the companies have a perverse incentive to trust their drivers more than the riders. Of course, the more competition you have the less of this behavior you see.
Versus having to find, download, and set up a new app for every new city... maybe on roaming data or dodgy airport WiFi... when you've just flown in...
Brand recognition is no small thing. Hyper growth is what a lot of companies are going for, because that's the model that lead to amazon dominating the world. Ubering being a verb is very valuable.
One of those leads to massive profit (eventually), and we'll see what happens with Uber.
Uber is bullish, maybe that's why?
With such a high burn rate, what are they going to do? From everything I read they're not like Amazon where they can just "turn on" monetization unless they're going to hike up their prices.
So, why would anyone invest in this stock long term? What am I missing?
It will just be a rather simple yet massive capital investment to put those cars on the streets, something that large, traditional companies with their far better financing terms will easily dominate.
Then you have two businesses; you manufacture cars to sell to people and you have a service arm that handles an Uber / Taxi like service with driverless cars.
I assume that's what any company like this does eventually once they've captured enough of the market.
Does Uber have enough market to hike their prices yet? Will it before it runs out of money? If they're IPOing I feel like they have to think they can do this, I just don't get the how.
You can shear a sheep many times, but skin them only once.