Thursday, March 23, 2017

Is Uber collapsing?

Uber has been making more news lately due to its unforced errors and executive turmoil than for its business. 

Months ago Francis and I sat in on a call seeking investors in the company, we listened, asked questions and politely said we'd think about it. The minimum required investment is far beyond my personal means, though if truly intriguing, a syndicate could be formed. After the call we discussed it and both believed that there were too many unanswered questions and more troubling, too many questions brushed aside.

The company's VC valuation is about $69B based on cash investments of $13B, this is a huge valuation and investment, but the firm continues to lose money quarter after quarter due to the fact that the cash raised is used to subsidize the fares that users pay in an attempt to drive competing car services out of business.

Top level concerns that I have about Uber as an investment include, few economies of scale that can achieved through growth and the barrier to entry for a competitor(s) is low. The other day I came across this series at Naked Capitalism on Uber that paints a dire picture of the prospects of the company.

We'll see, but it won't be my money at risk.



Anonymous Anonymous said...

we deleted our apps and moved to lyft based on the culture of sexual harassment claims at uber alone. it costs more to use lyft, but i feel better about it—and about how they treat their employees. we've asked lots of questions of our drivers from both companies, and lyft treats their employees so much better that it feels worth it to pay extra even without looking at the cultural claims. —ebk

5:45 PM  

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