tag:blogger.com,1999:blog-8152901575140311047.post987592527776615114..comments2024-03-28T08:49:51.975-04:00Comments on Musings on Markets: The Ride Sharing Business: Playing PunditAswath Damodaranhttp://www.blogger.com/profile/12021594649672906878noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-8152901575140311047.post-19595461386116080692015-10-26T16:30:19.088-04:002015-10-26T16:30:19.088-04:00Uber has just recently upped its valuation to 70 b...Uber has just recently upped its valuation to 70 billion, a ridiculous number for a private company. They appear to be leaving Lyft behind in the dust. While I appreciate the gentle and friendly values that Lyft has as a company, they don't work well in business. For example: Lyft and Uber both offer new driver promo codes for a sign up bonus. Lyft offers up to twice as much as Uber, paying out tons of money to new drivers. Uber on the other hand will only offer a sizable sign up bonus to new drivers that switch over from Lyft, stealing drivers right out of Lyft's pocket. Uber seems to focus their spending on advertising, like a new commercial that shows a man supporting a family on his Uber paycheck, which in reality would be terribly difficult on the wages they provide.Jake Wallhttp://lyftdriverpromo.comnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-15203110142485767052015-10-26T01:18:27.552-04:002015-10-26T01:18:27.552-04:00I am not very sure of what will happen to all the ...I am not very sure of what will happen to all the cabs and private taxi operators around the world, but, in India, there is a greater chance that these all alternate service provides (means other than Uber kind of companies) would put a stiff resistance and alongwith the support of regulators and administrators, they will put a stiff fight to Uber, etc. and definitely it will not be a cakewalk for Uber, etc. India is a country of great entrepreneurial zeal and this entrepreneurial zeal will see that no one becomes of monopoly business in India at least. The only way to differentiate is service standard coupled with less costlier ride. I have seen when I needed Uber and Ola the most (on a rainy day), no body turned up. Kamal Garghttps://www.blogger.com/profile/16495820539495052834noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-35093399477244743182015-10-23T12:13:23.897-04:002015-10-23T12:13:23.897-04:00Niraj,
I am not sure what you mean by "risk a...Niraj,<br />I am not sure what you mean by "risk adjusted". All DCFs are risk adjusted. If you are arguing that VCs are protected against downside risk, you should read my post of unicorns and how little protection these terms generate for VCs in the periods and companies when they need protection the most.<br />Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-20602892407689665932015-10-23T12:11:15.914-04:002015-10-23T12:11:15.914-04:00Yehuda,
The revenues that I estimate as imputed is...Yehuda,<br />The revenues that I estimate as imputed is the gross billing, not the net revenue. That said, getting to those revenues will require that a lot more drivers start driving for ride sharing businesses, and that much of this has to come from a fundamental shift in whether people own cars. As for regulations, you are right about the need for minimal regulation, but most of the regulations in the traditional cab business have little do with safety and comfort and more to do with maintaining the cartels.Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-29639287042210268682015-10-23T11:48:35.417-04:002015-10-23T11:48:35.417-04:00Did you also know that "US law keeps Ferrari ...Did you also know that "US law keeps Ferrari from making more than 10,000 cars a year"? See the article here that explains this http://www.businessinsider.com/ferrari-prevented-by-us-law-from-making-10000-cars-a-year-2015-10?r=UK&IR=T<br /><br />I think Ferrari investors are in for a rude awakening when they realize this 1-3 years from now.Siahttps://www.blogger.com/profile/05915856696281889732noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-74296725423494782072015-10-22T12:13:09.172-04:002015-10-22T12:13:09.172-04:00Great summary. Two questions: Are your revenue num...Great summary. Two questions: Are your revenue numbers gross, or net, i.e. only the actual commission revenue that these rideshare companies take from the drivers? Also, the issue with the total market forecasts for these companies revolves around the actual supply of drivers. Has that factored into any of your projections? How many people will actually want to drive for these companies? As each market gets saturated with drivers, the actual amount of money each driver will make will plummet. Without enough drivers, growth will slow dramatically for all these companies. <br /><br />Ultimately, Uber and the other companies have opened a can of worms with the regulated taxi companies, but even if I agree that many of the regulations are antiquated and car sharing rightfully expanded the market, there are still specific reasons for certain types of regulations, which these car sharing companies do not adhere to. It's not possible to have a "market" in car services, or any market for that matter without some minimum regulations (it's like playing basketball with no rules). Additional regulation will surely crimp the growth and profits of these car sharing companies.<br /><br />In any case, now that the biotech bubble has definitively popped, and many of the top companies are receiving extensive scrutiny (e.g. VRX), I think the next bubble to pop will be the "unicorn" bubble. People will look back at these unicorns and wonder, how on earth they became valued at billions of dollars without ever providing any financials to investors. It's .com bubble, 100X worse. At least then you knew the companies had no business model. Now it's all a black box. Anonymoushttps://www.blogger.com/profile/10021435237247673669noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-4845906432390765342015-10-22T01:23:17.540-04:002015-10-22T01:23:17.540-04:00It will most likely grow and most likely there wil...It will most likely grow and most likely there will be many rides sharing business emerging like mushrooms and making it much harder. And there will be increase in supply and lesser demand. Business will most likely get monopolized by one company and you are right it is accompanied with more intense competition and rising costs and losses. I talked to one of the cab drivers affiliated with Uber and he said that theres a lot of drivers now, competition is tough and it's rather a hassle at this point. So investing in ride sharing business at this point is not that simple. It is actually a even higher risk investment than something simplier like managed account in binary online trading. Worked for me with eclipse-finance.com , making about $4000 monthly off of the money I got by selling my Toyota.Anonymoushttps://www.blogger.com/profile/10874184147053778712noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-38365971087868401352015-10-21T21:08:13.944-04:002015-10-21T21:08:13.944-04:00Question : Should you not be looking at the valuat...Question : Should you not be looking at the valuation on a <b>risk adjusted basis</b> ? My understanding is that a lot of later stage valuations are based on <b>preferred stock</b>. This is really a debt deal for the person's who are putting in the money. They would not mind a high valuation as long as their downside is protected. The person that will get hurt is probably the founder as result of revaluation on the negative side.Gandalfhttps://www.blogger.com/profile/06480714242783122078noreply@blogger.com