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I see competitive forces driving down this valuation. What's stopping people from just picking a cheaper competitor?
Yup, this is the main issue. I don't see how Uber has any differentiation in its actual product, only in its branding (and even that's easily replicated).
Makes you wonder what other industry hasn't been tapped into?
Uber Plumbers?
Uber House Cleaners?
Uber Car Mechanics?
Dogvacay is one and I really love it. Instead of taking your dog to a boarding kennel where they spend almost all day in a concrete confined little area with little to no human interaction, you can board your dog at people's homes. You get to see their reviews, pictures of their home, request meet and greets and Dogvacay insures everything.
I see competitive forces driving down this valuation. What's stopping people from just picking a cheaper competitor?
It's already happening... originally Uber only offers luxury black cars. Then Lyft and Sidecar offered individual cars at a much cheaper price, so Uber created UberX to compete head to head. Now Lyft and Uber created a third choice for ride sharing.
Makes you wonder what other industry hasn't been tapped into?
Uber Plumbers?
Uber House Cleaners?
Uber Car Mechanics?
Perhaps Uber is trying to become the service-version of Amazon - starting out with one niche, doing it well, then scaling it to nearly everything else? Or, in other terms, like a 'paid form of Craigslist'.
Only problem is that taxi services are a pretty homogeneous product. When it comes to things like technicians/service people (plumbers, house cleaners, et. al.), the variability in the service can be great from one person to another. Uber's current business model is (AFAIK) just being like the parent franchisor, skimming a few % off of the top, and merely acting as a clearinghouse, without really supervising or having any formal "quality assurance" to standardize the service provided. Don't think you can do that as accurately with services that can vary by that much with massively different outcomes.
I’ve now read that Uber has a whopping $40b valuation. I’m supposed to believe that a company that dispatches cabs is worth this much? I don’t get it.
You are fighting a losing battle. Go back and read some of the posts in 1998-2000 on some of the dot.com stocks. No matter how stupid the underlying premise was, people would invest in them. Back then, it was billion dollar valuations on stocks that often had less than $1M is revenues.
The danger in taking the short positions in these stocks is that the valuations are NOT based on any fundamentals. Therefore, they can go up a lot longer than you would anticipate. It is almost like a Ponzi scheme.
Uber promoters remind me of a lot of the Enron employees we had working in our plant. They saved us a ton of money by selling us cheaper energy. However, none of the employees could tell us how they made their money, but were all completely convinced of the value of their stock and never hesitated for mocking us as we were not interested. Uber wants us all to not question certain liabilities involved in the taxi business which they probably not recording in their books.
Just looking at Google News and saw a new story about Uber. Apparently an Uber driver in India was just arrested for raping a young woman. He had recently finished serving a jail sentence for a prior rape.
The Indian police said that if he had applied to be a "regular" taxi driver, he would have been denied because of the rape conviction. Uber has no such restrictions. They are seriously looking into filing charges against Uber. Uber is responding that according to their Terms of Service, it is absolutely the responsibility of the passenger to ensure their own safety and Uber has no liability for anything that happens.
I would be very surprised if we don't start seeing various lawsuits against Uber playing out in multiple locations.
Only problem is that taxi services are a pretty homogeneous product.
The product comes in several flavors. So far, Uber seems to have most of the clean, English speaking drivers who have functioning cars and who know how to get around the city. This leaves the traditional taxi monopolies with drivers who are hard to distinguish from terrorists (I won't go into detail, you know what i am talking about).
uber isn't pets.com but it's definitely over valued at 41B, when it's revenue is only $2 billion per year.
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