Uber is an American multinational transport network company based in San Francisco which offers a range of services including peer-to-peer ridesharing, ride service hailing, food delivery, and bicycle-sharing. It’s so easy to get around with Uber. And while you’re riding to your destination, you still have time to check your emails, call your friends to make plans for the weekend or play an online casino game.
Uber’s business operates in 785 urban and metropolitan areas in almost every corner of the globe, and its different platforms can be accessed via an array of websites and mobile apps. Statistics for 2019 suggest Uber currently has around 110 million users. The company has secured 69% of the American passenger transport market, plus a 25% market share in the food delivery sector. Uber’s high-profile in the sharing economy which has restructured many long-established industries has also coined a new term for the process, which is often described as ‘uberisation’. And unsurprisingly, the company’s decision to become a public company has attracted plenty of market comment.
Uber was founded by computer programmer Garrett Camp and entrepreneur Travis Kalanick back in 2009. Originally called Uber Cab, the company reconfigured the passenger transport industry by developing a sharing model in which rides could be booked via a smartphone app. By 2011 the business was officially launched in San Francisco as a luxury hire car option, before changing its name to Uber and subsequently morphing into the cut-price, rapid-response transport solution on which its reputation has been built.
Uber market coverage
Uber is now available as a transport option in most major cities of the world. So in Paris, Montreal, Montreal, Moscow or any other densely populated urban area, you can hail a cab via a mobile app. And, of course, Uber is also widely available in the UK. London itself (where the average cost of a 10km trip is $17.55) is Uber’s largest European market with 3.5 million users, and the company has a business presence in other large cities like Birmingham, Bristol, Belfast and many more. In terms of its 2019 UK popularity, Uber has been used most by the 18-24 age group (27%) and then by 25-34-year-olds (16%), but seems not to be favoured much by those over 55 (2%).
As elsewhere in the world, Uber’s market presence has had a disruptive effect on the UK taxi sector in urban environments. There have been disputes about the employed or self-employed workplace status of Uber drivers, as well as concerns about passenger safety which have brought the company into conflict with regulators, and even resulted in licence suspensions in some cities.
Uber has also been proactive in extending its core business model into other service areas. For instance, Uber Eats is a business which delivers meals from local restaurants who sign up to the scheme, and the average delivery fee seems to be around $4. In addition, Uber Freight uses much the same concept as its taxi business to connect truckers and freight shippers in the commercial sector. Other initiatives include air travel, health and a partnership with Barclays Bank to offer an Uber credit card with a cashback feature. But perhaps Uber’s most significant diversification has been its controversial investment in the development of future-oriented driverless transport technologies.
Uber goes public
Many market analysts note that Uber is a company which doesn’t make any money, and has a revenue growth which is slowing and is expected to taper off even more. Some observers even predict that Uber may never manage to show a profit. Nevertheless, Uber is undoubtedly the highest value IPO to occur since the stock market flotation of Facebook and Alibaba. Thus its market prospects have been the subject of much speculation.
In late 2018, the talk was that Uber’s public valuation would be around $120, billion. But as the IPO loomed, that projected valuation figure started to slip. At first, it was thought the IPO would settle at between $44 and $50 per share, but the final figure of $45 (a reduction of 38%) was something of a disappointment. Nevertheless, this price would still create a valuation in the region of some $75.46 billion.
As with many IPO valuations, there were a number of factors involved, but analysts believe the earlier flotation of Lyft, Uber’s main competitor, was decisive. Since going public, Lyft’s stock has lost 25% of its value, and it’s hard to find experts who don’t believe the market will treat Uber much the same.
An Uber future?
Uber’s going public will change the company, and perhaps signal the end of cheap taxi fares. This, and Uber’s abrasive business strategy, may lose the company a great deal of support, threaten its future market dominance and unsettle shareholders and investors. It certainly looks as if Uber now faces what the Chinese like to call ‘interesting times’.