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Uber must solve the problem of how to eliminate subsidies without losing customers and thereby undercutting its valuation.įILE PHOTO: The Uber logo is seen on a screen in Singapore August 4, 2017. Kalanick himself said low fares were temporary.īut eight years in, the strategy is now in doubt as competition in many markets continues to intensify. That strategy was built on the assumption that Uber could achieve a dominant position in many big cities quickly and eventually raise prices. Uber’s losses stem from its drive to win global market share at almost any cost. Four mutual fund companies holding Uber investments recently marked down their shares by as much as 15 percent, according to the latest disclosure documents released. Other investors are already discounting company shares. Outside investors contemplating buying Uber shares, however, have indicated they think the company is worth less than its current $68 billion valuation - perhaps much less. WHERE TO INDICATE 2 PASSENGER FOR UBER RIDE SERIESBenchmark in a series of Tweets earlier this month indicated it believed Uber will soon be worth more than $100 billion. The question vexing everyone is what the company is worth. Early backer Benchmark Capital has sued former CEO Kalanick and fought with other investors, some of whom have offered to buy Benchmark out. The issue of Uber’s valuation is hardly academic amid a boardroom battle over control of the company. The upcoming financial report will show further improvement on margins, according to an Uber executive, but the company continues to spend heavily on subsidized rides in certain markets. Uber will report second-quarter financials to investors this week, which will offer fresh insight on whether the company can get profitable any time soon.Īlthough private, Uber has started releasing limited quarterly financial data, and in May reported a loss of $708 million for the first quarter, down from $991 million in the fourth quarter. That simple question is often lost among the many controversies facing the ride-services company as it tries to hire a new chief executive and resolve a bitter dispute with the old one, Travis Kalanick.īut it may be the most important question of all when it comes to determining the value of Uber Technologies Inc, which has built its business on massive subsidies to both riders and drivers, producing huge losses in the process, and has yet to show that it can maintain growth without them. ![]()
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