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What will it take for Uber to show profitability? For one thing, demand. Senior RSG contributor John Ince covers this week’s round up of ridesharing news, including demand for Uber/Lyft, why Uber is different from Amazon, and the possibility of ‘flying cars’ in the distant future.
A Third of Americans Use Ride-Hail. Uber and Lyft Need More. [Wired]
Sum and Substance: But just 2 percent of users call an Uber or Lyft almost every day—down from 3 percent in 2015.
Have you been inside an Uber? How about a Lyft, or another ride-hailing service? If the answer is duh, rethink your sense of superiority. Because you’re in the minority.
According to a new poll conducted by the Pew Research Center, just 36 percent of American adults say they have used ride-hailing services. Sixty-one percent say they have heard of the services but hadn’t taken a ride. The remaining 3 percent said they hadn’t heard of them at all.
That comports, mostly, with other surveys conducted in the past year about Uber and Lyft ridership, which have found that between 24.4 and 43 percent of the US population has used apps to summon rides….
Americans’ interactions with the ride-hailing services depend, unsurprisingly, on who they are, where they live, how old they are, and how much they make. More than half of 18- to 29-year-olds have used Uber, Lyft, and their like, but just 24 percent of those over 50 have. Fifty-five percent of college grads have hailed an Uber or Lyft, but 20 percent of those with high school degrees or less have gotten into the services. While 53 percent of those with household incomes over $75,000 have hitched ride-hail rides, less than a quarter of those making less than $30,000 have done the same. And high-income urban dwellers are way more likely to have hopped aboard than high-income people living in rural areas—71 percent compared to 32 percent.
… Still, the number of habitual riders is small. Only one in 10 users of ride-hailing services say they use these apps at least weekly, including just 2 percent who say they use them every day or almost every day. That’s actually down from 3 percent in 2015. Which means there aren’t that many folks who see ride-hail as an everyday commuting option. Another 22 percent are monthly users, while a majority of riders (67 percent) say they use these services less than once a month.
Uber and Lyft surely know this. It’s why you’ve seen both companies experiment with new kinds of services in the past few years: subscriptions, in-app integrations with public transit, shared “shuttle” services and cheaper (but slower) carpool options. In 2018, both companies poured money into bike- and scooter-share services: …
My Take: This survey highlights what may be the most damaging fact about Uber and Lyft as they prepare for the much hyped IPO later this year (or maybe even later). The harsh reality is that still very few people use these services. If it’s only 2% here in the United States, you can bet the percentage is lower in other countries. And it’s on a downward trend, not upward.
2% is a shockingly low number. It’s a far cry from the “like using a toothbrush” analogy Larry Page of Google/Alphabet used to describe the need for search. For most Americans using an Uber is more like having a cavity filled – something you do only once in a while, when you really need it.
If I were an investor, or a potential investor, this is the statistic I’d be scrutinizing. Fortunately for Uber and Lyft, most investors live in a tech bubble, where they get a distorted view, one that suggests ride-hailing is much more vital than it really is.
Will Wall Street Show Uber The Same Patience It Did For Amazon? [SeekingAlpha.com]
Sum and Substance: Both firms burned a lot of cash to completely upend incumbent industries with lower prices and superior service. It ultimately took Amazon 18 years to turn a profit. Wall Street, though, was willing to wait because of Amazon’s innovations like its AWS cloud computing business.
Unlike Amazon when it went public, Uber faces lots of competition and regulatory scrutiny from the get go. Uber, the ride hailing company expected to go public this year, may enjoy the biggest IPO of all time. But the most valued American unicorn faces a more difficult path to profits than Amazon (AMZN) when the e-commerce giant filed its IPO more than a decade ago…
Uber is making big bets on scooters and autonomous vehicles. However, it’s difficult to predict when these services will contribute to the bottom line. The latter especially requires an enormous amount of cash to develop the technology and will likely face big regulatory hurdles…
My Take: This is the article I’ve been waiting for. Inevitably, when I get in a discussion with someone about Uber’s financials, I get a response that goes something like, “But Amazon didn’t show a profit for a long time and now look at them.” Okay, true, but there are a lot of differences between Amazon and Uber, and here we have a writer who presents a balanced and incisive look at what Amazon had going for it that Uber doesn’t.
The biggest difference is that Amazon had a cash cow in AWS, their Web Services division. That bought them time and even today, provides a big chunk of Amazon’s profits. Uber has no such animal. Instead, Uber has cash drains like their overseas ventures and their autonomous vehicle division.
Since they don’t break out their financials by division, we have no real information about how profitable Uber Eats, the scooters and other ventures are. Anybody who thinks Uber is another Amazon is in for a shock shortly after their IPO. Until then, I suspect, hype will prevail. By the way, Uber CEO Dara Khosrowshahi is now saying publicly that Uber may not IPO in 2019.
Bell’s hybrid-electric flying car will be available via Uber by the ‘mid-2020s’ [The Verge]
Sum and Substance: This is Bell Nexus, the “air taxi” concept from the company formerly known as Bell Helicopter. A hybrid-electric propulsion aircraft, the Nexus will use six tilting ducted fans to take off and land vertically from a rooftop or launchpad. And more importantly, you may be able to hail one for a crosstown trip using Uber’s new aerial service in the not-too-distant future.
Air taxis, or flying cars if you’re feeling saucy, are enjoying an upswing in popularity, and the Fort Worth, Texas-based Bell is hoping to seize the moment. The company rebranded itself last year as a technology company, after decades as one of the top manufacturers of commercial and military vertical takeoff and landing (VTOL) aircraft. (It produces both the V-22 Osprey and the forthcoming V-280 Valor.) It now wants to make electric VTOL (eVTOL) aircraft, with the Nexus as its first foray into that futuristic market.
Bell was one of the first aircraft manufacturers to team up with Uber in 2017, when the ride-hailing company first released its ambitious plan to create a network of city-based flying taxis as a way to alleviate street-level traffic. Since then, Bell has been hard at work on its own design, and at CES this week, it pulled back the curtain on its first concept.
My Take: At first, this headline seems promising: Bell’s hybrid-electric flying car will be available via Uber by the ‘mid-2020s’. You read those words and think, Wow, this is just around the corner.
Then you read the article and discover that this whole thing still exists primarily in people’s minds – no infrastructure, no working prototypes, no regulatory approvals – nothing other than hype. Mark Moore, engineering director of aviation at Uber, is simply dangling visions of techno-utopia. Until companies get self-driving cars on roads figured out, I’m not buying into ‘air taxi’ hype.
Readers, what do you think of this week’s round up? Are you surprised Uber might not launch an IPO this year?
-John @ RSG
