How do you invest in a company that outright admits that they may never turn a profit?

 

I read an article this week about ford, stating they underestimated the complexity of development of SDC's. They pushed their timetable back a couple of years.

This leads me to think that uber is probably even farther behind. Plus, investing in and maintaining a fleet is likely to kill a company like uber, unless one of the big auto companies buys a controlling interest and their tech.

30k cars in the chicago market would run them something like 1B just in hardware.

 

I read an article this week about ford, stating they underestimated the complexity of development of SDC's. They pushed their timetable back a couple of years.

This leads me to think that uber is probably even farther behind. Plus, investing in and maintaining a fleet is likely to kill a company like uber, unless one of the big auto companies buys a controlling interest and their tech.

30k cars in the chicago market would run them something like 1B just in hardware.

Regarding self driving cars: I've always wondered how the rideshare companies plan on paying for the usage and maintenance of those vehicles... you know, those costs that us drivers currently bear. Minor things such as fuel, repairs, tires, brakes. What happens if someone vomits in a SDC? ?

 

Investing in a company that doesn't make a profit is a bet on the come, in the hope they might in the future. The vast majority of companies that don't make profits, fail and go out of business. We saw the same thing 20 years ago with the original dotcom boom. Lots of companies with lots of VC money felt the imperative was to "get big fast" and worry about profits later. Most failed.

We are seeing a repeat with the "unicorns" and "deca-corns". Lots of VC money that subsidizes money-losing operation in the hope they can generate hype and then IPO cashing out while greater fools buy the stock.

When autonomous vehicles come online at scale, you can bet that Uber or Lyft won't be the ones producing them. Perhaps they'll buy them, but most likely the fleets will owned by the car manufacturers and they'll enter into a contractual arrangement with Uber or Lyft. Unfortunately, the value Uber and Lyft bring to the table are the internet transactions that request a ride, dispatch a car.and then bill the rider. Like most internet transactions, the marginal cost is essentially zero and that is the share of the rider's fare that Uber and Lyft will be able to get.

The car manufacturers will be providing all the value in the ride and they'll be in a strong negotiating negotiating position to get 99% of the fare. If uber or Lyft balks, then the car manufacturer will set up their own ride-requesting app.

The best thing for Uber and Lyft is if the autonomous future is well into the future.

 

Or
Uber will do with SDCs just like everything else. They will offload most of the liability to contractors who will own small fleets. 1,5,10 cars at a time. The contractors will fuel, service and otherwise store the vehicles and get paid barely above cost for their efforts. They will probably also offer some kind of financing option so “partners” can purchase vehicles.

 

Or
Uber will do with SDCs just like everything else. They will offload most of the liability to contractors who will own small fleets. 1,5,10 cars at a time. The contractors will fuel, service and otherwise store the vehicles and get paid barely above cost for their efforts. They will probably also offer some kind of financing option so "partners" can purchase vehicles.

There is no defensible moat around software. The value is in the ride. A major manufacturer will want 99% of the fare or they will build their own network. Their cost to build and maintain is far less than an individuals cost to buy and maintain.

 

I agree BPM. Unfortunately, the amount of time and money to acquire the market share Uber has would be very expensive. The software part is relatively easy. Once Uber shows financial results and the company tanks, someone will swoop in and buy it for pennies on the dollar.

 

If Uber will not be profitable why bother going public and whom may buy Uber stocks when they know Uber will not make them money. Strange

 

If Uber will not be profitable why bother going public

The IPO is known as "exit" in the parlance of venture capitalists. You go public in order to cash out and dump the equity stake on retail investors.

There is typically a 6 month lockup period for existing owners. In the case of Lyft, what they floated in the IPO was about 10% of the outstanding shares. The rest of the shares were already held by the VCs, who can now dump them if they choose at 6 months. It will be interesting to see what happens.

America!

and whom may buy Uber stocks when they know Uber will not make them money. Strange

The greater fool will buy that bucket of flaming excrement, that's who.

Silly little wannabe technocrats that truly believe in the fantasy of SDCs.

Because there is no other way these companies ever make money. Think about it: cheaper than a cab, 30% skim, massive global technology apparatus... at face value it's about as bad as WebVan in terms of economic fundamentals.

 

I agree BPM. Unfortunately, the amount of time and money to acquire the market share Uber has would be very expensive. The software part is relatively easy. Once Uber shows financial results and the company tanks, someone will swoop in and buy it for pennies on the dollar.

A car manufacturer can field a fleet of vehicles at far less cost than any of their customers and could easily price below Uber and Lyft. Market share can shift rapidly and massively.

 

The stock price has been dropping lately on Lyft. I wonder if this is a sign for uber.