As we enter the holiday season, we have some new interesting research on how ridesharing could possibly contribute to excessive drinking. Senior RSG contributor John Ince rounds up this latest news, plus interesting developments with Uber stock, investment and more.
Travis Kalanick is selling off his Uber stock uber quickly [LA Times]
Sum and Substance: Travis Kalanick is having the sale of the century.
The Uber Technologies Inc. co-founder unloaded $350 million of stock this month, bringing his proceeds to more than $2.1 billion since a share lockup ended Nov. 6.
The 43-year-old’s remaining stake in the ride-hailing company now constitutes about a fifth of his $3-billion fortune, according to the Bloomberg Billionaires Index, down from about 75% before the lockup.
Co-founder Garrett Camp also has reduced his stake, though not on the scale of Kalanick. He has sold about $35 million of shares, a fraction of his $2.1-billion holding. Another insider is taking the opposite approach. Chief Executive Dara Khosrowshahi bought about $7 million worth of shares on Nov. 18….
Still, the stock has fallen about 33% since Uber’s May public offering as investors question its path to profitability amid regulatory challenges and controversies about passenger safety and drivers’ rights.
My Take: Travis isn’t wasting any time unloading his stock. What does he know that other investors don’t know? I suspect he knows a lot others don’t know.
Uber is reportedly in talks to offload Uber Eats in India [CNN]
Sum and Substance: Uber may be plotting an exit from India’s food delivery market. The ride-hailing company is in talks to sell its Uber Eats business in India to local rival Zomato, according to multiple reports citing sources familiar with the matter. A deal that would value Uber Eats’ India business at around $400 million could be announced as early as this week, the reports said. …
Zomato is one of India’s biggest food delivery apps, valued at more than $2 billion, according to the latest available data from research firm CB Insights. The company counts Alibaba (BABA) affiliate Ant Financial as one of its major investors. The takeover battle for food delivery startup Just Eat is escalating…
Uber Eats, which launched in India in May 2017, has been playing catch-up to its Indian rivals ever since, and Uber (UBER) CEO Dara Khosrowshahi foreshadowed the possible exit earlier this year.
“Our strategy for Eats is simple: invest aggressively into markets where we’re confident we can establish or defend a #1 or #2 position over the next 18 months,” Khosrowshahi said in the company’s latest earnings call in November, adding at a conference a few days later that Uber would “get out” if that was not the case.
Uber has been under pressure to show a path to profitability, particularly since its high-profile IPO in May, with investors concerned about the company’s history of steep losses and slowing growth. It reported a loss of more than $1 billion last quarter. …
My Take: I can’t comment whether $400 million is a fair price, but if they can get out of this market with that much money, it seems like a win to me.
Has the Rise of Uber Led to More Heavy Drinking? [CityLab]
Sum and Substance: If I am going out and plan to have just one drink, I’ll call an Uber. And that’s a good thing: Drunk driving is a public-health crisis, killing more than 10,000 people a year. One advantage of ride-hailing services like Uber and Lyft is that, according to a number of studies, they reduce drunk driving.
But there’s another connection between ride-hailing and alcohol. Ordering that Uber, it seems, encourages people to drink more than they otherwise would. That’s the big takeaway of a newly published study by a team of economists: Jacob Burgdorf and Conor Lennon of the University of Louisville and Keith Teltser of Georgia State University. Their study tracks the connection effects of ride-hailing services and drinking behavior across U.S. cities and metropolitan areas…
The hypothesis here is that when people have to drive themselves, they drink less, or identify a designated driver, and that reduces overall drinking levels in a city or metro area. But once the alternative of ride-hailing is available, a constraint is removed, leading to a local increase in both the frequency and quantity of alcohol consumption and in other risky behaviors.
The study uses detailed data on UberX, Uber’s most used ride-hailing service—data that was organized for an earlier study of the effect of Uber on public transit (which CityLab’s Sarah Holder wrote about here). It allows the researchers to identify exactly when Uber entered a city or metro and to look at the effect of its entry on drinking. As the researchers note, UberX entered New York City in the summer of 2012, and by the end of 2013 was up and running in 34 U.S. metros, expanding to 150 by the end of 2014, and more than 200 by the end of 2016.
The study also uses data on alcohol consumption and drinking behavior from the CDC’s Behavioral Risk Factor Surveillance System for the period 2009 to 2016. The CDC’s survey covers more than 400,000 people across the country and includes several detailed questions about the quantity and frequency of people’s alcohol consumption.
My Take: This research is at odds with Uber’s research, but I’ve often suspected as much.
However, what do you think of this news? Is it good that, overall, Uber and Lyft help to encourage people who’ve been drinking to take rideshare and not drive at all? Regardless of how much or how little they drink?
Or do you think that, without rideshare options, people just may have ‘a few’ drinks and get behind the wheel of their car? They’re not drinking excessively!
But let’s be clear – even before rideshare options, some people would still drink. It was just a question of whether or not they could/would hail a taxi, take public transit (if open), or drive home.
Which scenario would you prefer as a sober driver on the road at night?
Uber plans to ‘double down’ on bikes and scooters next year — especially in Europe [CNBC]
Sum and Substance: Uber claims adoption of bikes and scooters in Europe has outpaced that of the U.S. in the last eight months.
The company’s priority in Europe will be to focus on deepening its presence in existing markets like London. It plans to roll out electric mopeds in Paris by early 2020 after a delay caused by a product integration issue. …
The firm bought Jump, a bike-sharing service based in the U.S., last year betting on growth in the so-called “micromobility” space. It has since rolled out the company’s two-wheelers internationally, mostly in European cities. …
Uber claims adoption of Jump’s bikes and scooters in Europe has outpaced that of the U.S. in the last eight months. It says more than 500,000 Europeans rode the vehicles in the last eight months alone, racking up 5 million trips in total.
The firm didn’t provide data on how many U.S. users took rides with Jump, but said its most popular city right now is Paris, followed by Sacramento and Seattle.
… Uber also plans to bring a new mode of transport, electric mopeds, to its platform for the first time. The company was set to launch mopeds in Paris in partnership with local operator Cityscoot, but CNBC understands this was delayed due to a product integration issue. Freese said the company would look to roll out mopeds in the French capital in the first quarter of 2020.
My Take: Yes, this is a buzzy area, but I’m not convinced the buzz is justified. The regulatory environment is just beginning to wake up to dangers here. I don’t think regulators are going to be as slow in this as they were on ridesharing. Whatever happened to just owning a bike?
Are Lyft and Uber Flirting With Illegal Price Fixing? [Motley Fool]
Sum and Substance: Lyft CEO Logan Green acknowledged that ridesharing companies take cues from each other.
“Price fixing is an agreement (written, verbal, or inferred from conduct) among competitors that raises, lowers, or stabilizes prices or competitive terms,” according to the Federal Trade Commission’s definition of the illegal business practice. “Generally, the antitrust laws require that each company establish prices and other terms on its own, without agreeing with a competitor.”
While the nuances of antitrust law are beyond the scope of this article, I noted last month that “there’s a fine line between all companies in a sector recognizing the error of their ways and adjusting fares accordingly, and price fixing, which is an illegal form of market collusion.” As the ridesharing market continues to rationalize (i.e., raise prices to sustainable levels), Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) are seeing how close they can get to that line.
At the Credit Suisse tech conference earlier this month, Lyft CEO Logan Green sat down with analyst Stephen Ju to chat about a wide range of topics around the ridesharing industry. Discussing Lyft’s path to profitability, Green expectedly broached the issue of market rationalization. Green’s conclusion includes some language that regulators could potentially find questionable (emphasis added):
“There’s also been sort of general rationality of the market. So we took a little bit of risk for the first time and led the market in two small, modest pricing increases over the last couple of quarters. I think that’s been very healthy for the market. We’ve seen that matched by the competition. On the other side, we sort of attempted to do the same thing in terms of couponing and lead in creating a more rational market. We have not seen that matched.
So we’re going to change our stance, and we’ll sort of revert to a match and follow position. So I think in terms of some of the future sales and marketing leverage, it’s really dependent now on what the competition does. But I think broadly speaking, there’s no reason we shouldn’t see the sort of continued march to rationality in the market.”
My Take: Interesting article. Can’t say whether there is a violation here, but Lyft (and Uber) need to be careful. The regulators are out there listening.
Readers, what do you think of this week’s roundup?
-John @ RSG
