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As Goes Uber...

If you've seen the Forbes piece about Uber (http://www.forbes.com/sites/jaysomaney/2016/08/26/uber-lost-more-than-1-2-billion-in-the-first-half-of-2016-alone/#3168cffe1b77), or even just heard about it, you know they lost over a billion dollars in the first two quarters. In principle, that's not necessarily germane to the value of the company: every high-growth start-up spends like a drunken sailor to gain market share. Uber is just doing it at a rate that makes me nervously think of Webvan (their losses came to an estimated $830M in 2001...which rather eerily equates to $1.1-ish billion in 2016 dollars). Two questions: would you invest in something that was burning that much cash? And if Uber goes down in flames, what does that do to the market's hunger for unicorn shares?

Answers

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

It is really hard to comment on a private company without it's financials and pitchdecks (short and long range plans). Most info in the Forbes articles are inferences on previously "published" info.

Personally, I think that UBER is just scratching the surface. I am not concerned about the burn rate. Kalanik and most investors close to him are congnizant of this. This is why UBER gave up on China (or at least going at it alone). But the ride sharing/hailing is just the tip of the iceberg. Its purchase of OTTO (autonomous trucks) has tons of potential and so does a lot of the ancilliary market for the ride hailing biz.

I also find Kalanik to be like Bezos of Amazon. If you want to invest in Amazon, you would want to invest in Uber too.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Uber's major obstacle is changing the paradigm regarding local/state governmental regulation on car service/taxi/carriage.

It's second (or visa versa) is it's driver question: employee's or independent contractors.

Anonymous
(Finance Director / Controller) |

I have always scratched my head at Uber valuations. Looking at the genesis of the company, in terms of innovation, the little livery company in my neighborhood came out with an app that gets the same thing done just fine. I understand that has been scaled rapidly by Uber, with a high degree of success and adaptation.

Going "macro" - are they solving a new problem? I don't think so, since I define what Uber does as "public transportation". Trains and buses still do that better than putting more cars on the road (or even allocating usage of existing cars to that need which I bet is the mathematical argument, but I own a car and don't want to convert its idle capacity to Uber dollars). My gut tells me better the money had gone into rail and buses and related infrastructure, but what do I know.

Don't self driving trucks require some level of infrastructure investment as well in order to be successful? I sure don't want one of those on the roads (as they are today in NYC where I live) next to me. I guess they will start off with hubs, and then hand off to humans wherever the driving might require it.

Otherwise, they have a nice app and if I don't happen to use my local livery, or a yellow cab, I Uber. I am an admitted layperson regarding the matter.

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