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With IPO Upcoming, Uber Seems Intent on Dominating the World of Transportation, Profit Looms as Challenge

  • As Uber prepares for its IPO this month, the company has announced some bold plans to expand the scope of its operations
  • A comparison between Uber and Amazon has already been drawn; in the near future, Uber could be dominating many areas of the transportation market, much like Amazon is a giant in the retail space
  • Uber’s IPO is anticipated to be one of the biggest for a tech company in history; the company is seeking a valuation in the range of $90 billion to $100 billion

Ridesharing company Uber Technologies Inc. is providing clear signals that it’s working toward dominating the world of transportation as it’s prepares for its IPO on May 10, 2019.

From food delivery to freight, the company has bold plans that will potentially increase the scope of its operations, as a May 2019 Wall Street Journal report details (http://nnw.fm/PGDq6). A Business Insider report goes a step further, calling Uber the next Amazon (http://nnw.fm/xLP28).

The comparison was explored further in a piece by The New York Times (http://nnw.fm/7l1U5), which notes, however, that, on the surface, the two companies have very little in common.

Amazon is a massive online retailer that sells nearly everything imaginable. Currently, Uber enables customers to hail rides via a mobile app. The ride-sharing business, however, is only the first step toward the establishment of a business model that’s much more extensive. Uber has made a number of announcements, all hinting toward a potential expansion in the future.

Uber’s chief executive officer, Dara Khosrowshahi, has been quite outspoken about the Amazon analogy. Cars are to Uber what books are to Amazon, Khosrowshahi said in a Fortune tech conference that took place in the summer of 2018 (http://nnw.fm/2Yksh). Amazon was capable of establishing a powerful infrastructure that enabled the company to extend beyond the realm of books and into additional retail categories. The same model will be followed by Uber, Khosrowshahi concluded.

Investors will see whether the Amazon comparison is adequate in the months and years to come. Currently, Uber’s top executives are preparing to start meeting investors during the so-called roadshow occurring before the company goes public.

As the roadshow commences, Uber’s executives will have to address a couple of main issues. The first one is the delivery of a sound growth strategy. The current lack of profit will also have to be discussed. As per the Amazon analogy, Uber can claim that it’s acceptable to not be making money at the current time. In order to establish solid foundations for the future growth of the business, the company has to invest available cash.

In an extensive analysis piece, Uber executives are quoted as saying that the company will continue to bleed cash as it recruits more drivers, works on customer acquisition and focuses on increasing its share of the ride-share market (http://nnw.fm/Fvn9V). The company reported a net income of $997 million in 2018, but its losses topped $1.85 billion. Uber is now at a total deficit of $7.9 billion, and, in order to achieve profit in its multiple markets, the U.S. included, it will need to find ways to increase revenue and decrease expenses.

All of the company’s financials are expected to be under close scrutiny before it goes public on May 10. Uber’s IPO is anticipated to be one of the biggest for a tech company in history. The company is seeking a valuation in the range of $90 billion to $100 billion (http://nnw.fm/8EEfs). The company aims to sell approximately $10 billion worth of stock, encouraged by the poor performance of rival Lyft’s (NASDAQ: LYFT) shares after its IPO on March 29. Lyft went public at $72 a share, but prices have dropped 11 percent since then, largely due to concerns over the company’s path to profitability.

Uber was launched in 2009 as an app-based luxury car service. It grew rapidly, and, today, Uber holds 60 percent of the U.S. transportation services market and a solid presence in more than 60 countries around the world. Attempting to build itself as a one-stop-shop transportation service provider is nothing but the next logical step in the evolution of Uber.

For more information, visit the company’s website at www.Uber.com

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