Uber Goes Public, Unsuccessfully

Uber (and Lyft) revolutionized transportation – cheap rides, the most successful app in the store and pretty much creating digital on-demand work. It can’t lose, right? Wrong, kind of.

Uber went public, the obvious next step for the transportation giant. As the market closed on May 10, the company’s stock was down 7.8 percent from its I.P.O. On Monday, May 13 it plummeted to $37.10 per share, but it has since leveled out. Lyft hasn’t had much luck either. While it initially surged, the luster wore off soon after launching, and it posted a loss for Q1.

So why are these two having such a hard time compared to other startups? Their services are “affordable” making investors leery of how the companies could actually turn a profit someday. Uber went through $2 billion last year. It started a new venture with Uber Eats and is dabbling in autonomous vehicles, which can quickly get expensive. Will it ever make money? Seems as though investors are thinking it won’t, and they’re sick of betting on startups that don’t have a roadmap to getting into the black.

They have to start turning a profit or at least have a plan to get there. In my opinion, this could quickly lead to higher prices for the consumers. The only way for them to make more money is to charge more money. This will likely cut out 35 percent of its ridership. And, at some point the cost will raise to the point where pricing will be on par with “old-school” cabs, creating even more competition in the market.

Is rideshare going to die? No, but something has to change in order for it to survive long-term. Whether it’s a different business model or charging more money per ride, soon investors will be saying, “show me the money.” Uber better deliver or it will fizzle out.