Yahoo Finanzen Rideshare Rivals: What Happens to Uber Now?
A decade ago, uber was just a German preposition meaning "above." Then it became a proper name in 2009, when UberCab (Uber's forerunner) was founded in San Francisco -- and then a noun as the prophets of high tech applied the label "Uberization" to any industry revolutionized by an entrepreneurial outsider.
But today, at least in the eyes of would-be investors, Uber might as well sit between a salty expletive and a synonym for startup hubris. Here's why: Before this rideshare giant can pick up passengers on the way to IPO-land, it must deal with the most unlikely obstacle of all -- co-founder and CEO Travis Kalanick.
Uber driver Fawzi Kamel, if you'll recall, caught the 40-year-old billionaire berating him with foul language in February via dashboard video after he brought up the subject of falling fares. For observers already wary of a company culture marked by allegations of frat-boy swagger and sexual harassment, the embarrassing footage wasn't exactly a confidence booster.
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"Most anticipate that Uber's highly anticipated IPO won't happen soon because of recent negative publicity," says Christopher Ma, director of the George Investments Institute at Stetson University in DeLand, Florida. "Uber's loss on public opinion -- from early 2017's '#DeleteUber' campaign to its recent scandals -- is Lyft's gain."
Indeed, the rideshare competitor Kalanick brags about beating in that infamous video may now find itself ready to pull ahead, at least where the IPO race is concerned. It is now valued at $7.5 billion, after company officials confirmed a recent $600 million round of financing.
"Lyft has impressive blue-chip backers, including KKR (ticker: KKR), Baillie, Alliance Bernstein ( AB), General Motors ( GM), Rakuten and Janus Capital Group ( JNS), who are well-known to provide funding just ahead of an IPO," Ma says.
Meanwhile, assuming that Kalanick becomes too big a distraction for the venture capitalists who support Uber, he could wind up on the roadside thumbing a ride. Here, robust financials aren't nearly as relevant as the conventional wisdom that companies going public need steady leadership.
"The business has matured to point where they can replace him if needed," says Greg Portell, lead partner at management consultant A.T. Kearney and based in Chicago. "The current financial backers have strong incentive to keep his behavior from hurting the valuation."
Adds Portell: "Beyond the normal venture capital exit priorities, two big questions will determine the IPO timing for Uber and Lyft: First, do they need access to capital? Second, are the hassles of going public worth it?"
Yet it's also arguable that Uber is such a swiftly growing concern, not even its unruly CEO can derail it. As Ma notes, "Uber continues to gain large revenue and has not yet had any problem to raise exorbitant amounts of private capital." Given that he gets to stick around long enough, "this is why Kalanick wants to make sure an IPO happens as late as possible."
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How formidable is the ridesharing juggernaut? In its report "Uber & Ride-Sharing: The $650 Billion Question," SharesPost says since 2010, the top five ridesharing companies (which also include Ola, Grab and China's Didi-Chuxing) have raised a combined $25 billion in private capital and now have a combined market capitalization of nearly $120 billion.
"The size of the market creates an opportunity for ridesharing companies to grow 10 times in size," says Rohit Kulkarni, managing director and head of research at SharesPost. As for the report's title, "If ridesharing accounts for a 5 percent share of annual human miles traveled in the future, these companies stand to benefit from more than $650 billion in economic value created per year."
That doesn't mean the financials of ridesharing companies are bulletproof. Documents leaked to Wired in December showed that Uber lost a staggering $800 million on net revenues of $1.7 billion. What's more, public opinion definitely counts when a company is fully dependent on public consumption of its product.
Crimson Hexagon, which collects social analytics data culled from more than 1 trillion social media posts, reports that January's #DeleteUber campaign on Twitter generated more than 220,000 posts. More than 134,000 posts came on Jan. 29, the day of protests by taxi drivers at New York's Kennedy Airport in response to the Trump administration's immigration ban.
Uber, not Lyft, was a target of consumer ire for two reasons. First, Uber was perceived as capitalizing on taxi strikes by turning off its "surge pricing" feature. Second, Kalanick had close ties to President Donald Trump, accepting a spot on his business advisory council, then resigning just days after the #DeleteUber campaign.
Less than a month later, Kalanick became the unsuspecting villain in the dashboard cam video. Yet even if Kalanick by his own admission and filmed evidence is a big mouth, the conventional wisdom on Wall Street is, was and always will be this: Money talks.
And when it's billions of dollars in a new, largely untapped market, the lucre is likely screaming at this point.
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Thus in the final analysis, Uber and Lyft may find themselves in a position quite the opposite of their everyday, customer-facing realities. That is: Consumers dialing in a ride from an Uber or Lyft app are in no mood to wait.
But if you're a would-be public investor, you'll just have to take a number and get in line until your ship comes in -- whenever that is.
"There would be significant public equity institutional investor appetite for both these companies," Kulkarni says. "Uber and Lyft are such strong companies that they can go public on their own timetable."
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