There are some ways Uber’s valuation could be justified, according to the analysts interviewed with which article, yet right currently, they remain difficult to predict.
DA Davidson Senior Research Analyst Tom White said in order to justify at $100 billion valuation, he is actually looking for three things. First, he’d want to see evidence which Uber could significantly improve its revenue growth. Second, he’d look for signs which pressure on Uber’s margins will not last too long. along with third, he’d try to understand if investors are willing to pay a premium for Uber compared to Lyft.
Outside of its ridesharing business, where which directly competes with Lyft, Uber features a chance to differentiate itself if one of its different businesses take off. While Lyft has expanded more slowly, available in just two countries along with focused mainly on ridesharing along with different mobility areas, Uber has taken a different approach, expanding into 63 countries along with taking on different projects. which could ultimately bode well for Uber.
“I think a huge focus is actually Freight along with Eats. Those are key ingredients inside recipe for success,” Ives said. “I think the one thing which stood out inside S-1 is actually just how large the revenue along with the opportunity were there relative to what investors were expecting.” Uber Eats, for example, grew gross bookings coming from $1.1 billion in Q4 2017 to $2.6 billion in Q4 2018.
Another road to greater profitability is actually through automation for its ridesharing business. Currently, Uber only gets a cut of each ride which offers since drivers take a share as well. On top of which, which has to offer steep incentives to both drivers along with customers to get them to use their service in a competitive market, something Uber even listed as a risk factor for its business. yet if the company some day can cut out the driver along with use self-driving cars instead, its road to profitability becomes much clearer.
“If autonomous driving someday becomes a thing, then which could make which business nicely profitable,” Meeks said. yet he said Uber can’t lean heavily on which currently since “I don’t see which as a mainstream thing for many years.”
With little to go off of, investors are likely already looking to Lyft’s performance as Uber readies its roadshow.
“For better or worse, these two are sort of tied at the hip,” Meeks said.
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