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On the eve of Uber’s initial public offering, a new refrain is coming from the company and certain quarters of Wall Street. Those considering an investment shouldn’t imagine the company as just a money-losing app-based taxi service, the argument goes, but as the next Amazon. In the past 20 years, Amazon has gone from shaky dot-com startup to one of the most valuable, dynamic, and powerful companies in the world. If Uber’s executives can convince would-be shareholders it has similar promise, it may be able to get them to give it a pass on its perpetual lack of profits and boost its IPO. He continued: «Amazon’s the gold standard. The line seems to have worked. Uber has already found more than enough demand among investors for its IPO.
In its recently amended IPO prospectus, Uber acknowledged that its quarterly core platform revenue growth rate in Q1 declined to only to 5. It is not uncommon for relatively young companies to invest in rapid growth. This is the latest in a series of narratives that Uber has floated over the past four years to distract attention from an inconvenient truth that the company has, and continues to lose more money faster than any US venture in history. Its Answer May Surprise You. The lede went on to say:. To understand why comparing Uber to Amazon is a false narrative, it is instructive to start by recognizing that Amazon historically has not been nearly as unprofitable as is commonly believed.
On the eve of Uber’s initial public offering, a new refrain is coming from the company and certain quarters of Wall Street. Those considering an investment shouldn’t imagine the company as just a money-losing app-based taxi service, the argument goes, but as the next Amazon. In the past 20 years, Amazon has gone from shaky dot-com startup to one of the most valuable, dynamic, and powerful companies in the world. If Uber’s executives can convince would-be shareholders it has similar promise, it may be able to get them to give it a pass on its perpetual lack of profits and boost its IPO.
He continued: «Amazon’s the gold standard. The line seems to have worked. Uber has already found more than enough demand among investors for its IPO. Amazon started off as an online bookseller and built out technological and logistical systems to underpin that business.
It was later able to take those underpinnings and use them to support other businesses — first by selling CDs and other kinds of products itself, then by assisting other retailers in selling goods online, and later by offering access to all kind of companies to its computing and logistical resources.
Uber has how much amazon invested in uber potential, Khosrowshahi has said. It’s already using the technology platform it built for its taxi service for the food-delivery service Uber Eats and for Uber Freight, which pairs truckers with loads of cargo.
And the platform could be used for much. Indeed, Uber is arguably one of the few tech companies to come along since Amazon that can make the case that they could one day be as big as the e-commerce giant, Ives said. Lots of companies — including many that were contemporaries of Amazon — have big ambitions. Few realize. And almost none realize them to the extent that Amazon. Amazon and Uber are vastly different companies that cater to different customer needs and have had very different corporate lives.
Amazon was only three years old when it went public. Uber has already been around for a decade. Khosrowshahi and Uber’s backers are comparing the ride-hailing company to arguably the most successful company to come out of the s dot-com era, said Kenneth Broad, a portfolio manager with Jackson Square Partners, a San Francisco investment firm. Business Insider took a close look at the two tech giants to untangle the similarities and the differences.
There’s evidence on both sides — a lot comes down to how much weight you place on different factors. It hademployees at the end of last year, giving it one of the largest workforces in the world. Uber is much smaller than Amazon, but it’s still sizable, and among tech startups it’s a behemoth.
It’s also one of the biggest, with 22, employees worldwide. But the company’s prominence involves more than just its valuation. The company pioneered the app-based taxi-service industry, which has become a big business globally and helped reshape local transportation markets around the world. It has also helped jump-start and become a standard-bearer for the gig economy, in which tech companies essentially rely on armies of freelancers rather than full-time employees to deliver their services.
Though it was much smaller, Amazon symbolically became every bit as important as Uber. Even as dot-coms exploded everywhere, Amazon both stood above the pack and became a symbol of the era. It pioneered e-commerce both through its website and by backing other dot-coms targeting other retail markets, including grocery delivery and drug stores.
Uber has drawn backing from some of the biggest tech startup investors, most notably SoftBank’s enormous Vision Fund. But it’s also gotten funding from some of the most prominent traditional venture-capital funds, including Sequoia Capital, Benchmark Capital, Menlo Ventures, and Kleiner Perkins. As it’s gotten bigger, it’s also drawn investments from other tech firms, including Google, Baidu, and Microsoft, and from nontraditional startup investors, including Goldman Sachs.
For its part, Amazon too had the backing of Kleiner Perkins, which was the most prominent and prestigious VC firm of its era. When it launched, Amazon dubbed itself Earth’s Biggest Bookstore. Similarly, Uber’s initial focus was on its app-based ride-hailing service, which at launch allowed consumers to request a ride in a so-called black car, or luxury vehicle. The company’s original name was even UberCab, though it later changed it to distance itself from the traditional taxi industry.
Amazon served the entire United States when it launched, but it didn’t branch outside the country for more than three years. Two years after launching its service, Uber debuted Uber X, which expanded the service beyond luxury vehicles.
The next year, following the lead of Lyft and SideCar, Uber opened its service to nonprofessionals driving their own cars. The next year,it launched UberPool, its carpooling service, and began testing a food-delivery service that it eventually named UberEats. Three years later, the company launched Uber Freight for the trucking industry.
Uber’s moves to diversify its business are reminiscent of Amazon’s. The e-commerce giant started selling CDs about three years after launching its bookstore then continually expanded its retail offerings, branching out into videos, electronics, home-improvement products, toys, and eventually clothes and shoes. Early on, it opened its site and service to third parties, helping small and large businesses alike sell online. The company launched Amazon Web Services, its cloud-computing arm, insome 10 years after its public-market debut.
Uber started offering its service in New York less than a year after its San Francisco debut. Chicago soon followed. The company went international later inwhen it started offering service in Paris.
Three years later, the company’s service was available in cities. Amazon likewise showed early on that it had global ambitions. It launched sites targeted the UK and German markets inthree years after debuting its US site. Two years later, it opened sites serving France and Japan. And two years after that, it launched a site serving Canada.
The company now has online stores serving 16 countries. Uber posted a profit last year but only because it sold off some of its businesses. It’s never generated a profit from its operations and has needed repeated influxes of cash to keep its business running.
Amazon similarly how much amazon invested in uber with red ink. The company reported losses for years, even after becoming a public company. Amazon invested heavily in building out data centers, warehouses, and logistical infrastructure to support its e-commerce business.
But it soon realized it could use those resources not just for its operations but also to support other companies. Today, Amazon Web Services, the cloud-computing operation that spun out of its data-center investment, provides half of its profits.
And customers spend more on buying products offered by the third-party merchants selling through Amazon’s site than they do on products sold by the company directly. Uber enthusiasts think the company has similar potential. Already it’s using the systems it originally built to pair individual riders and drivers to support its food-delivery service and Uber Freight, which matches truckers and carrier services with companies needing items hauled.
It’s also been working on autonomous vehicles, which could one day allow it to offer a robo-taxi service. At the turn of the century, amid the dot-com bust, many wondered whether Amazon would ever become profitable or whether it would be the next company to die. Uber enthusiasts think the company is one of the few that have the potential to do the same thing. Amazon is at base a retailer and retail service provider that gets much of its revenue by selling products directly to consumers.
To support its business, it has hundreds of thousands of employees who work in its warehouses and physical stores. Uber is largely a transportation provider that operates a marketplace, pairing up drivers and riders.
Unlike Amazon, it doesn’t employ the people who are primarily responsible for offering its service to consumers. From the start, Amazon could offer its core service to Americans regardless of where they lived. It was able to serve customers in rural markets as well as urban ones. And its service was equally relevant to both, if not more so to rural customers who faced more limited choices of brick-and-mortar stores.
But Uber is largely an urban phenomenon. Rural and even suburban consumers generally rely on their own vehicles to get. It’s not clear that Uber will ever find much of a market for its core ride-hailing service or even its food-delivery service outside dense urban areas. He said the idea that a town of a few thousand people that’s separated from the nearest town by 30 or 40 miles would suddenly be ordering UberEats «doesn’t make sense to me.
Amazon began trading on the public markets less than two years after it launched its website. Uber, by contrast, is going public almost nine years after it debuted its service. Uber has been operating now for nearly nine years. Despite that, it’s still racking up huge operating losses and burning through ample amounts of cash. Amazon reached a similar point in its life cycle in But by then it was comfortably profitable and cash-flow positive.
It started generating positive free cash flow in and started to post a profit according to standard accounting principles in The dot-com bust of the early s wiped out scads of e-commerce, internet, and tech companies, including several that Amazon invested in.
While Amazon was never seriously in danger of going out of business, its big losses and the carnage in the sector spooked investors and worried analysts. To appease them, the company cut its costs and investments and made a concerted effort to start generating cash and profits. Uber, by contrast, was born after the Great Recession and has never had to adjust to an economic downturn. It’s also never had to worry about tightening credit or investment markets.
It’s always found ready cash to fund its losses. The dot-com downturn «stress-tested Amazon, and it came through,» said Daniel Morgan, a portfolio manager and longtime tech investor at Synovus Trust.
During the dot-com boom, Amazon faced numerous competitors in e-commerce that threatened to limit its potential markets. Many sold their products at a loss, making it tough for Amazon to operate profitably. But the recession of the early s killed off or hobbled many of these rivals, including companies such as Webvan, Pets.
That gave Amazon the ability to enter and exploit other markets — and to operate on a more sustainable basis. Though it still faced formidable challengers in Walmart and eBay, neither focused as closely on online retailing as Amazon did, giving it room to cement its lead.
Amazon is Offering $10,000 to Start Your Own Business (It’s a Scam Though IMO)
There are some similarities between Uber and Amazon
Follow him on Twitter BrettArends. Unicorns How Amazon Financing Works. Most analysts are still bullish, at least in public. The company is young. Retirement Planner. Advanced Search Submit entry for keyword results. Or should you hang on and hope they recover? Compare Investment Accounts. Apple Inc. Nor can I.
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