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Uber Technologies Inc. announced Friday that it would solicit an initial public offering worth $ 80 to $ 91 billion. This figure is a revision of previous expectations that would have earned the taxi company of the 21st century more than 100 billion dollars at the time of its IPO. The company may have opted for the lower figure, knowing that it lost another billion in the last quarter.
The mobile services giant recorded the loss of $ 1 billion the same day it announced the valuation expected for the next IPO. Heavy losses in the first quarter of 2019 come after a year in which Uber spent $ 1.8 billion more on transactions than for bookings and other revenue sources. Uber's bears say the company is simply too profitable before it goes public to make a good investment.
But it is important to keep in mind the conventional path that Uber follows to achieve profitability for a huge technological monopoly. Keep in mind 1) the vastness of Uber's reach and infrastructure, with 85% market dominance over the shared carpool industry; 2) the incredible value of his brand; 3) how its "losses" represent mbadive capital investments; 4) and its impressive ability to systematically collect mbadive revenues every quarter to cover its debts …
The Uber stock remains a promising long-term investment in a winning and disruptive technology monopoly, as well as in the emerging emerging technologies and trends likely to drive Uber to a situation of mbadive monopolistic profitability in a few years if the company continues on its current trajectory.
Uber's incomparable domination on the market
85% market share Uber in the category of large technology monopolies such as Google (market dominance of 91% in online search), Microsoft in 2000 (absolute dominance of 97% of the market in operating systems for PC) or Amazon (49% market dominance). US $ 394 billion electronic market). Monopolies of this size of market share compared to lucrative industries end up with more profits than they know what to do. With $ 245 billion in cash at the beginning of the year, Apple is just putting money on the moon in savings accounts.
For a while, Apple Inc. had $ 252 billion in foreign bank accounts until the GOP tax bill reduced tax rates ranging from 35% to 8% for a limited time to allow US companies repatriate their ocean of cash. The fact is that the kind of business in which you want to invest to make huge profits is a monopoly. Companies that compete in profitability. The dominating companies make profits so incomparably vast that many people instinctively feel that it is obscene to win so hard, while most others do not.
Peter Thiel, a billionaire from Silicon Valley, has adopted this approach as a venture capitalist. The founders of PayPal and Palantir are well aware of the overwhelming advantage of creating a business that would become a monopoly from the first day. He said, "Competition is for the losers," and the flip side of his message is that companies with the kind of market dominance, Uber, have are mbadive winners at capitalism.
Uber's "losses" are capital investments in a lucrative technology monopoly
Critics hasten to point out that Uber is not just not yet profitable, but that it is mbadively unprofitable. For example, this article in The Drive claims that the company's $ 1.8 billion red ink sea for 2018 is "bad news for Uber, which seeks to attract investors to an initial public offering to Savings (IPO) later this year. But do not forget Uber has significantly improved its net and financial profits in 2018. Investors had to provide $ 2.2 billion to the huge behemoth in 2017 to ensure its growth. It's a trend towards profitability.
Uber has had no trouble raising money from investors because it has even fewer difficulties in sucking up money from tower bookings at a breakneck pace. The carpool application founded in 2009 recorded a staggering $ 50 billion in bookings in 2018. Its $ 11.3 billion in revenue represents a 43% increase in Uber's highest sales by $ 7.5 billion in 2017. Many highly profitable technology companies have already taken this route. These are fundamentally sound companies that operate with reasonable loss and a clear and probable path to monopolistic profits. Investors like opportunities like this.
Examples of such companies include Facebook, which is distinguished by its successful IPO, the largest IPO in its history and the fourth in its history today. Facebook's revenue before the IPO was $ 3.7 billion. And Twitter was also unprofitable when it went public, with net losses of $ 143 million.
Amazon spent $ 1.4 billion in 2000, three years after its IPO. This did not stop nature from taking its course, as the unique value and dominance of Amazon's market share allowed the company to get through with the help of investors. The title IPO AMZN has proven to be one of the most important investments in history. $ 100 in 1997 was worth $ 120,000 twenty years later. Uber stock will debut at $ 44 to $ 50 a share.
Invest in autonomous vehicles via Uber
An investment in Uber shares, or those of Lyft, its second distant competitor in terms of market share in the amusement ride industry, is an investment in autonomous vehicle technology. It's a safe bet that, in addition to the huge profits that can be made by tweaking its business model, Uber will realize even more profit by automating a fleet of driverless cars. Despite its ability to carry money, Uber has a notoriously high cost structure. The $ 50 billion reduction in last year's bookings was $ 11.3 billion.
In Peter Thiel's disruptive business model, a truly profitable business is one that creates unparalleled value, and captures most of that value as profit. Automation is the most important and remarkable opportunity for the carpool industry to capture more value.
Drivers will still have several years to earn a living (in the case of long-haul truck drivers, for whom there is a shortage of staff in the United States), but in step with advances in automated driving technology, their years in this service business are numbered. But the technological upheavals will also save them time and money. And disruptions inevitably create a myriad of new opportunities.
The selected image is a courtesy of Shutterstock.
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