Uber is a great service but a risky investment
You know you’ve made a strong brand when your company name is a verb. Unfortunately, a strong brand is not the same as a strong company. Just ask Snapchat or Buzzfeed.
Investors have forgotten the fundamentals with Uber. Uber is not profitable. It is nowhere close to profitable, losing nearly $1 billion in a single quarter last year. Its unprofitability is not unique among ride-sharing apps, or even Silicon Valley investments.
The Silicon Valley startup formula is:
- Find a niche user base
- Get them hooked on your app/service/brand
- ???
- Profit!
Profitability is a can kicked down the road. The trendy founders make the dream happen, and then a big-girl or big-boy CEO is brought in to turn that dream into a legitimate company. Some day.
Uber’s nebulous valuation of 80, 90, or even $120 billion is utter speculation. The valuation hinges on an incredibly uncertain future.
Uber does not have a unique advantage
Uber wins if they figure out autonomous ride-sharing vehicles first and best. Being first by itself isn’t enough, or else Lyft wouldn’t have a current market cap of over $15 billion. They must be an order of magnitude better than the stampede of competitors at their tail (Lyft, Tesla, Waymo, and GM-owned Cruise, probably someone else I don’t know about).
There’s no reason to believe Uber has a better chance at ride-sharing autonomy more than the others, unless you’re considering motivation alone. Which of those companies has the infrastructure and physical hardware (AKA the actual vehicles) in place to support a move towards market domination? Actually, only one: Tesla.
Assuming that the ride-share game hinges on whoever catches the golden snitch of autonomous vehicles, who is best positioned to win from those four competitors? Probably not the one overpriced at $90 billion.
Disclaimer: what do I know? This isn’t investment advice. Do your own research.
