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In 2009, two computer developers joined forces to create a better way to get around town. Garrett Camp wanted to spend a fun night out on New Years Eve, but needed to cough up $800 for a private driver between him and his friends. Camp hated paying this much for basic transportation and hatched an idea for a cheaper alternative.
You can’t walk a block in any major U.S. city without seeing an Uber decal on the back windshield of every other car. With a few exceptions, Uber’s operation has now reached nearly every city in the country.
If you want to invest in Uber, it’s worth noting the company has a global presence and is still growing. Uber offers global ride sharing services in the European Union, Africa and Asia, among other global markets.
How Do You Invest in Uber?
It doesn’t seem like Uber has any plans of slowing its pace to stay number 1 in the ever-evolving rideshare community. In over 10 years, Uber has quickly expanded to food delivery, freight, boat, bike, as well as entering the air and autonomous travel sectors.
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Should I Invest?
Uber, so ubiquitous that the company name is now a verb, remains at the forefront of autonomous vehicle research. The company can’t seem to get out of its own way at times and mercurial former CEO Travis Kalanick has never shied away from controversy (or confrontation). Now that we’re approaching 2 years since Uber’s IPO, let’s consider the pros and cons of investing in Uber.
- Variety of services: Uber does more than just transport passengers from point A to point B. UberPOOL is a service that allows customers to carpool for cheaper rides. UberEats is a delivery service that supplies food from chain restaurants like McDonald’s, Papa John’s or local establishments. These new services allow Uber to find revenue streams from different customer bases.
- Simple, convenient process: The entire process of summoning an Uber, meeting the driver and reaching your destination is simple and way more convenient than a cab.
- Autonomous car research: Driverless cars are Uber’s eventual goal; the company will make far more in profit if it doesn’t have to pay a driver. The program was temporarily shut down following a fatality last year, but Uber continues to aggressively explore autonomous vehicles.
- Prop 22: In recent news, a majority “yes” vote on Prop 22 in the state of California recently allowed Uber and Lyft to be exempt from classifying their drivers as employees. This is seen as a big win for both companies who, as a result, are not required to offer employee benefits like health care.
- Constant controversy: Uber has frequently attracted negative news coverage. The company has always considered itself a renegade and has been caught using illegal technology to prevent regulators from using its service. Reports of sexism and toxic workplace culture at Uber are plentiful, and former CEO Kalanick has been caught on camera in an altercation with an Uber driver.
- Large annual losses: A good reason to avoid investing in a company? If it doesn’t make any money. Uber reported a loss of $2.8 billion in 2016, a $4.5 billion loss in 2017, followed by a $865 million loss in 2018. The company wants to increase fares and use autonomous vehicles to boost revenue, but neither option seems likely to happen soon.
- Coronavirus pandemic: As the world continues to manage the coronavirus pandemic, it’s worth calling into question the future financial viability of ride sharing apps.
- The rise of competitors: Uber may have snapped up all the work from taxis, but Lyft has begun cutting into Uber’s territory as well. Lyft has stolen 27-35% of the rideshare market from Uber in certain cities, a trend that might continue because of Uber’s not-so-spotless reputation.
- Customer satisfaction: Uber has earned 4.7 stars from 1.2 million ratings in Apple’s app stores as of publishing. Uber trails Lyft from a customer satisfaction perspective. Lyft has garnered 4.9 stars from 8.7 million ratings.
Uber smashed all boundaries in the business of getting people from point A to point B. The service is convenient, easy to navigate, and completely cashless. As a company, Uber has a number of red flags as it met its 2019 IPO and those need to be considered if you’re a potential investor.
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