Assignment WHAT IS THE Business Model OF UBER PDF

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WHAT IS THE BUSINESS MODEL OF UBER?

Uber’s business model appears to be based on three stages. First, Uber will monopolize cities’ ridesharing market through an expensive battle to eliminate competitors and change cities’ regulations, allowing its business model to flourish. Second, it can begin to raise prices for consumers based on its market dominance. Third, it can invest the resulting profits in autonomous and flying vehicles, thus promising investors a ground-floor buy-in to the future of transportation. The Business Model in a Nutshell: The Taxi Driver - Anyone with a driving license and a car can apply for an Uber driver in any Uber covered cities. After screening, the driver is enlisted in the Uber system and given an Uber iPhone. This provides a steady income to anyone with a car without additional hazard or investment. The Passenger - Registered Uber users download the Uber app to their phones and if they need a taxi, they call a taxi via the Uber app. They can also track the taxi on their phone as it approaches. This service is convenient for the passengers, provides them relatively low cost comfortable service. Fare and Payment - Uber set the taxi fares. Premium fare during peak hours and flat rate for off peak hours. Passengers pay through their credit cards and don’t have to pay any cash to the drivers. The fare is based on car type, distance and peak hour. Payment is secure because passengers pay only via credit card using Uber app. Dividing the Profits - Uber divides the fare, usually 80% to the driver and 20% to Uber. Even after a 20% pay cut, the taxi drivers earn more than the traditional taxi services. In some cities Uber had to reduce its percentage because of competition from similar companies like Lyft and Haio. Future Growth – At present, Uber doesn’t own any taxi and because of that Uber can show a higher amount of its earnings as profits. Uber needs to invest in research and development for future growth. The initial reinvestment will be a modest amount, but enough to slow down future earnings.

WHY IS IT SO ATTRACTIVE? Uber app is user-friendly, fast responsiveness from servers and systems and minimal glitches make Uber exceptional. Calling a taxi cab with the smartphone is easy and any passenger can benefit from it. Uber had no previous solid competitors in the taxi service business when it started it has established a solid infrastructure, branding and consumer trust.

WHAT IS THE DISADVANTAGES FOR BUSINESS AND RISKS FOR PASSENGERS? Uber is plagued with liability questions and insurance issue, more than any other start-up services. Lawsuits from taxi companies and unions in several big cities including New York, kept Uber engaged in regular court battles. There is a demand for such service, but overhead cost and costly legal battles threaten the business.

CHECK THE CURRENT FINANCIAL REPORT OF UBER. WHAT IS THE CURRENT FINANCIAL COMPANY SITUATION?

Revenue of $3.2 billion grew 13% and mobility exceeded 1 billion trips in Q4 of 2020. Financial Highlights for Fourth Quarter 2020 

Gross Bookings grew 16% quarter-over-quarter (“QoQ”) to $17.2 billion, down 5% year-overyear (“YoY”), or 4% on a constant currency basis, with Delivery Gross Bookings growing 128% YoY and Mobility Gross Bookings declining 47% YoY, respectively, on a constant currency basis.

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Revenue grew 13% QoQ but declined 16% YoY, or 15% on a constant currency basis. Delivery Revenue grew 19% QoQ and 224% YoY while Mobility Revenue grew 8% QoQ and declined 52% YoY.

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Net loss attributable to Uber Technologies, Inc. was $968 million, which includes $236 million in stock-based compensation expense.

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Adjusted EBITDA loss of $(454) million, reduced by $171 million QoQ and by $161 million YoY, and represented (14.3)% margin as a percentage of revenue.

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Mobility Adjusted EBITDA of $293 million, up $48 million QoQ and down $449 million YoY, and represented 19.9% margin as a percentage of Mobility Revenue.

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Delivery Adjusted EBITDA loss of $(145) million, reduced by $38 million QoQ and by $316 million YoY, and represented (10.7)% margin as a percentage of Delivery Revenue.

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Unrestricted cash, cash equivalents and short-term investments were $6.8 billion at the end of the fourth quarter....