Uber’s IPO is here and it’s proven to be divisive. Some are calling their billion-dollar losses “an outrage.” Others are questioning the company’s growth saying their earnings have seemingly plateaued. However, when Uber hits the stock market people will be wagering on what will happen in the future. As such, people are now buying into ideas just as much as they buy into the presentation.
What Uber Represents
Uber’s IPO prospectus represents a future in which labor is parceled out via algorithms that match supply to real-time demand. They believe that workers will move easily between various jobs without being tethered to a traditional job. Additionally, they feel that the transportation and delivery market will become one in which we share on-demand services. Uber seemingly believes that this should reach into the trucking, food delivery, and shipping markets as well.
To do this they’ve created a platform for workers who are interested in helping them with the moving and delivery of these various items. These are all items which you can use their app for tracking too. For instance, Uber Eats is now a $1.5 billion business and they believe that this is just one of many opportunities that will open up in the foreseeable future. This includes things like self-driving vehicles, which Uber is working to develop the technology for so they can increase their revenue and profits. Of course, many are worried about how this would change drivers’ feelings as their livelihoods are eroded by the complete change in ride-sharing dynamics.
What You’re Wagering on with Uber
Uber is based on a discounted-cash-flow method. Here they’re imagining how much money they’ll make in the future then working their way back to determine a fair price today for said hypothetical earnings. This isn’t how most companies are valued though. Instead, they’re typically valued from the top down whereby you come up with a value for the market being addressed, assume such market exists, consider any possible changes to the number that could make the market larger, and create a high valuation for your brand. Another option is to value a company from the bottom up whereby you consider how much money you’ll spend to get each new user and how much money each new user will bring your way then multiply it by different combinations of said factors.
Tracking these possibilities are easily imaginable. You could even imagine Uber having a monopoly of its core markets. However, Lyft already has 40% of this market because the markets are functionally the same. There are also places (e.g. Russia, China, Southeast Asia) where Uber has lost billions trying to outdo the competition that already has a foot hold there.
Uber also needs to make sure that it has a large enough labor force. While it already has 4 million drivers, they’ll need millions more if they were to dominate.
These are just some of the things Uber must overcome still. So, when you’re ready for a delivery option that already includes tracking, make sure you reach out to Same Day Delivery. Many businesses already have and are quite glad that they did.
Picture Credit: charles