Author Topic: UBER stock  (Read 2428 times)

August26th

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UBER stock
« on: May 21, 2019, 04:04:54 PM »
I am not a stock picker, but decided to put all of - wait for it - $500 toward Uberís brand new IPO. So - I bought 13 shares.

Thoughts on Uber as a holding? For me, the $500 is pure play money, but perhaps a fun experiment. I bought at 38.28 and today itís about $3 over that. So, hey, Iím $36 in the black. Ha!

Does anyone else choose stocks for fun? I am all about mustachian principals otherwise, but occasionally itís just fun to see how something plays out, especially if it is insignificant to your overall FI or net worth goals.


lost_in_the_endless_aisle

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Re: UBER stock
« Reply #1 on: May 21, 2019, 06:28:30 PM »
Well good job for not buying at the IPO price ($45, right?). It's a loss-generating gypsy cab company with an app. The only thing of potential value is their global brand name recognition and speculation around whether or not they will be first to figure out self-driving cars. My guess is several companies will get to a level of automation that is good-enough around the same time and Uber will once again have very little IP that distinguishes itself from its potential competitors. In that case, you're just buying the brand name and not sure if what you've got is MySpace or Facebook.

The amusing thing I've noticed about your everyday retail investors is how they gravitate towards whatever brands they recognize through personal use or through the media. I have spoken to several would-be "investors" at work with extreme tunnel-vision belief in a particular investment yielding certain profit (oil, cannabis, gold, Apple, Tesla). I though I explained the efficient market hypothesis pretty well once to the cannabis guy. He seemed to understand that all relevant information was priced into a stock; however, after our conversation, he still wanted to go buy some (stock, not cannabis!).

mucstache

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Re: UBER stock
« Reply #2 on: May 21, 2019, 09:46:18 PM »
Uber has a number of big problems. The most relevant one in my mind: it just does not scale!
Every. Single. City. market needs to be acquired one by one, spending huge amounts for subsidies. Switching cost for riders and drivers nearly zero.

This is just the tip of the iceberg. I actually wrote an analysis on Uber's problems on Medium a while ago: https://link.medium.com/4eUl3Ix5SW

frugledoc

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Re: UBER stock
« Reply #3 on: May 22, 2019, 02:18:45 AM »
Itís an amazing company. I think they will conquer the world.  Happy to hold in my all world index tracker.   If I did buy individual shares I would stick this in my 1 year old sons tax sheltered account.

nereo

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Re: UBER stock
« Reply #4 on: May 22, 2019, 05:10:54 AM »
Thoughts on Uber as a holding?

It's speculative, which is just a code-word for gambling. The allure isn't of Uber isn't driven by current fundamentals, but what might happen with the company in the future (and the one thing most can agree on is that in 5 years Uber will be drastically, fundamentally different from today, either for good or for bad).

As long as you realize you aren't actually investing, do what makes you happy (so long as you can afford it and don't make stupid bets).  I've got other hobbies I prefer to spend my time doing.


crammarc

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Re: UBER stock
« Reply #5 on: May 22, 2019, 08:04:07 AM »
I like it.  I bought some shares in the $38-39 range too. 

It is speculative because we don't know what their path to profitability will look like.  There are big dreams that ride hailing companies will take over all passenger vehicle trips and public transport trips but that is a very long way off.  Will the company ever be much more than a taxi/food delivery service?  In my opinion, probably.  They are the first mover in this market and they should have the best/biggest data set to make future decisions on where to grow.  This is where an investor needs to trust (hope) the leadership in the company knows what they are doing.

What I do know is that Uber is growing fast.  Their billings, net revenues, riders and rides are all increasing rapidly.  Also, the services from Uber and Lyft are clearly useful. I've used them a handful of times coming back from bars or going to the airport and its been convenient.  For me the growth and utility were enough to give the company a more thorough look and ultimately buy shares after it took an unnecessary drop do to China trade-war stuff.

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Re: UBER stock
« Reply #6 on: May 22, 2019, 08:11:41 AM »
I'm convinced it's going to burn to the ground.

It pays drivers a terrible rate and relies on them not knowing what they're doing to their cars' resale values. And yet it still loses a truly deranged amount of money - about fifty-seven dollars a second for every single second of 2018. There is absolutely no concrete evidence that the company will ever be able to turn a profit - its valuation is based almost entirely on the runaway success of the Big Five tech companies and desperate investor hope that this is the sixth, combined with a solid decade of subterranean interest rates leaving billions of dollars in search of growth.

PDXTabs

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Re: UBER stock
« Reply #7 on: May 22, 2019, 08:42:51 AM »

appleshampooid

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Re: UBER stock
« Reply #8 on: May 22, 2019, 10:05:25 AM »
Uber has a number of big problems. The most relevant one in my mind: it just does not scale!
Every. Single. City. market needs to be acquired one by one, spending huge amounts for subsidies. Switching cost for riders and drivers nearly zero.
Yeah, the thing about Amazon (another company that lost money for 10 years, and is now profitable) is that as they got bigger, there were economies of scale that allowed them to increase their per-unit profit as they got bigger. There's not really the same thing with Uber or Lyft. As you get more drivers and more riders, each ride still costs the same amount to provide.

I'm convinced it's going to burn to the ground.

It pays drivers a terrible rate and relies on them not knowing what they're doing to their cars' resale values. And yet it still loses a truly deranged amount of money -
This is another thing that sticks out - they are really relying on people who are bad at math to drive for them. The rate is pretty bad, but acceptable, when you just look at gas. But when you then look at depreciation and maintenance on your vehicle, and other costs of being an independent contractor like payroll taxes and health insurance, holy crap it's a really bad rate to drive around. AND EVEN WITH THAT RATE, they are losing money hand over fist.

Uber and Lyft have been in a race to the bottom on fares to get more business for years; I think one of them will die. And then fares will go up, probably to around what taxis charge.

nereo

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Re: UBER stock
« Reply #9 on: May 22, 2019, 11:10:50 AM »

Uber and Lyft have been in a race to the bottom on fares to get more business for years; I think one of them will die. And then fares will go up, probably to around what taxis charge.

Neither Uber nor Lyft seem to be betting on human drivers for the future - both seem to be heavily investing in driverless cars. Which on the surface makes sense - why pay a human to do a job a computer could do, round the clock, with fewer accidents.  The tech isn't quite there yet, but it's getting temptingly close. The big hurdles are with laws and regulations, which is often driven by labor unions.

I'm guessing in 15-20 years we'll view taxi drivers the same way that we now view elevator operators. I'm skeptical that my toddler will ever need a driver's license.

BECABECA

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Re: UBER stock
« Reply #10 on: May 22, 2019, 11:25:43 AM »

Uber and Lyft have been in a race to the bottom on fares to get more business for years; I think one of them will die. And then fares will go up, probably to around what taxis charge.

Neither Uber nor Lyft seem to be betting on human drivers for the future - both seem to be heavily investing in driverless cars. Which on the surface makes sense - why pay a human to do a job a computer could do, round the clock, with fewer accidents.  The tech isn't quite there yet, but it's getting temptingly close. The big hurdles are with laws and regulations, which is often driven by labor unions.

I'm guessing in 15-20 years we'll view taxi drivers the same way that we now view elevator operators. I'm skeptical that my toddler will ever need a driver's license.

What I donít understand is how Uber expects to make a profit in the future when they own the driverless cars instead of their drivers who at the moment are footing all the cost of the carsí depreciation & upkeep. Are they assuming that driverless cars will be owned by individuals who again lend their asset to Uber and again foot the bill for all the costs? Given that they havenít turned a profit while benefiting from their drivers footing all the capital depreciation, I think itís crazy to hope for profits when they own the driverless fleet.

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Re: UBER stock
« Reply #11 on: May 22, 2019, 11:35:56 AM »

Uber and Lyft have been in a race to the bottom on fares to get more business for years; I think one of them will die. And then fares will go up, probably to around what taxis charge.

Neither Uber nor Lyft seem to be betting on human drivers for the future - both seem to be heavily investing in driverless cars. Which on the surface makes sense - why pay a human to do a job a computer could do, round the clock, with fewer accidents.  The tech isn't quite there yet, but it's getting temptingly close. The big hurdles are with laws and regulations, which is often driven by labor unions.

I'm guessing in 15-20 years we'll view taxi drivers the same way that we now view elevator operators. I'm skeptical that my toddler will ever need a driver's license.

What I donít understand is how Uber expects to make a profit in the future when they own the driverless cars instead of their drivers who at the moment are footing all the cost of the carsí depreciation & upkeep. Are they assuming that driverless cars will be owned by individuals who again lend their asset to Uber and again foot the bill for all the costs? Given that they havenít turned a profit while benefiting from their drivers footing all the capital depreciation, I think itís crazy to hope for profits when they own the driverless fleet.
It's one of the many unknowns, and highly speculative (getting back to whether owning Uber stock is investing or gambling).
As I understand it from listening to all the various coverage, the advantage to going to an entirely autonomous fleet is that Uber will save massive piles of cash from not paying drivers, and will operate the most efficient and low-maintenance cars possible (i.e. EVs without the performance and comfort options common for personal-owned vehicles).  Much like Amazon has done with its warehouses, algorithms could predict where cars will need at various times.
All this is currently possible, but not completely fleshed out.

CCCA

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Re: UBER stock
« Reply #12 on: May 22, 2019, 12:34:19 PM »
if the key differentiator of driverless cars is software, it seems unlikely that Uber or any company can keep a moat around their business.  There doesn't seem to be a network effect that requires all driverless cars to be the same network, which is different from the Microsoft Windows/Office monopoly.  I suspect once autonomy is reached, competition will limit profits, just as it is now between Lyft and Uber.
 

MaaS

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Re: UBER stock
« Reply #13 on: May 22, 2019, 12:42:05 PM »
Well good job for not buying at the IPO price ($45, right?). It's a loss-generating gypsy cab company with an app. The only thing of potential value is their global brand name recognition and speculation around whether or not they will be first to figure out self-driving cars. My guess is several companies will get to a level of automation that is good-enough around the same time and Uber will once again have very little IP that distinguishes itself from its potential competitors. In that case, you're just buying the brand name and not sure if what you've got is MySpace or Facebook.

The amusing thing I've noticed about your everyday retail investors is how they gravitate towards whatever brands they recognize through personal use or through the media. I have spoken to several would-be "investors" at work with extreme tunnel-vision belief in a particular investment yielding certain profit (oil, cannabis, gold, Apple, Tesla). I though I explained the efficient market hypothesis pretty well once to the cannabis guy. He seemed to understand that all relevant information was priced into a stock; however, after our conversation, he still wanted to go buy some (stock, not cannabis!).

Good post. Basically what I clicked to say.  The upside is based on profits from eliminating drivers. Who knows who gets there first, however.

As a side note - I actually think the rideshare market would fare well in a recession. The driver supply would increase and more people in cities would forgo car ownership entirely IMO. But, does it become profitable? No idea.

To the point: I'd hold it but refrain from investing significant money.
« Last Edit: May 22, 2019, 06:14:10 PM by MaaS »

Stimpy

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Re: UBER stock
« Reply #14 on: May 22, 2019, 02:40:11 PM »
I think if your investing for the long term (ie MUCH MUCH more then 5 years) you MIGHT have a chance.   Keyword on MIGHT.   Between Lyft, Uber, and eventually Didi, I think we are at a race to see who can go bankrupt first.   The winner is the company whom declares bankruptcy last.

Why do I say that, well without having done actual research beyond the various news articles, in to any of these companies, I can't say for certain, but just from those, there are TONS of red flags.  Talking almost as bad as 2000 Internet company with no product going ipo tomorrow bad.    But everyone has their risk tolerance, so who knows, Maybe Uber will be the next Apple/Amazon/Google/StupidLargeCompanyHere.

All I can say is good luck on your bets.  Hopefully someone here will make something on these race to the bottom stocks.


sideHustler

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Re: UBER stock
« Reply #15 on: May 22, 2019, 02:41:57 PM »
Also, Google is coming for them.

Very interested to see what Google does with it.

PDXTabs

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Re: UBER stock
« Reply #16 on: May 22, 2019, 03:04:40 PM »
Very interested to see what Google does with it.

Me too, and my global market cap weighted portfolio is already 1.35% Alphabet (and 0.06% Tesla). EDITed to add: I guess VT doesn't hold any UBER today.
« Last Edit: May 22, 2019, 03:07:50 PM by PDXTabs »

Blueberries

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Re: UBER stock
« Reply #17 on: May 22, 2019, 03:19:48 PM »
I wouldn't buy UBER yet, but that's just me.  I did listen to the first LYFT earnings call and I can understand why many are interested in the space.  I do think these companies have the potential to be an industry disrupter, but if and/or how that will play out remains to be seen. 

The amusing thing I've noticed about your everyday retail investors is how they gravitate towards whatever brands they recognize through personal use or through the media. I have spoken to several would-be "investors" at work with extreme tunnel-vision belief in a particular investment yielding certain profit (oil, cannabis, gold, Apple, Tesla). I though I explained the efficient market hypothesis pretty well once to the cannabis guy. He seemed to understand that all relevant information was priced into a stock; however, after our conversation, he still wanted to go buy some (stock, not cannabis!).

Yes, this poses many problems, namely that people don't set limits.  Peter Lynch recommends buying stocks you know (as do others, I'm sure) and I understand the suggestion, but for many, it's just a bad idea.  The average retail investor falls in love and then convinces themselves that the company can do no wrong.  They start seeing problems creep up in the relationship, but they defend their love knowing that things will get back to "normal".  They often end up in a bitter divorce. 

lost_in_the_endless_aisle

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Re: UBER stock
« Reply #18 on: May 22, 2019, 04:26:37 PM »
I wouldn't buy UBER yet, but that's just me.  I did listen to the first LYFT earnings call and I can understand why many are interested in the space.  I do think these companies have the potential to be an industry disrupter, but if and/or how that will play out remains to be seen. 

The amusing thing I've noticed about your everyday retail investors is how they gravitate towards whatever brands they recognize through personal use or through the media. I have spoken to several would-be "investors" at work with extreme tunnel-vision belief in a particular investment yielding certain profit (oil, cannabis, gold, Apple, Tesla). I though I explained the efficient market hypothesis pretty well once to the cannabis guy. He seemed to understand that all relevant information was priced into a stock; however, after our conversation, he still wanted to go buy some (stock, not cannabis!).

Yes, this poses many problems, namely that people don't set limits.  Peter Lynch recommends buying stocks you know (as do others, I'm sure) and I understand the suggestion, but for many, it's just a bad idea.  The average retail investor falls in love and then convinces themselves that the company can do no wrong.  They start seeing problems creep up in the relationship, but they defend their love knowing that things will get back to "normal".  They often end up in a bitter divorce.
I think the problem with buying what you "know" is it amplifies whatever amount of Dunning-Kreuger effect you already have in your dumb monkey soul ("I know Apple stock is going up because I love my $1000 iphone and everyone must want one just like it")

Blueberries

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Re: UBER stock
« Reply #19 on: May 23, 2019, 07:25:41 AM »
I wouldn't buy UBER yet, but that's just me.  I did listen to the first LYFT earnings call and I can understand why many are interested in the space.  I do think these companies have the potential to be an industry disrupter, but if and/or how that will play out remains to be seen. 

The amusing thing I've noticed about your everyday retail investors is how they gravitate towards whatever brands they recognize through personal use or through the media. I have spoken to several would-be "investors" at work with extreme tunnel-vision belief in a particular investment yielding certain profit (oil, cannabis, gold, Apple, Tesla). I though I explained the efficient market hypothesis pretty well once to the cannabis guy. He seemed to understand that all relevant information was priced into a stock; however, after our conversation, he still wanted to go buy some (stock, not cannabis!).

Yes, this poses many problems, namely that people don't set limits.  Peter Lynch recommends buying stocks you know (as do others, I'm sure) and I understand the suggestion, but for many, it's just a bad idea.  The average retail investor falls in love and then convinces themselves that the company can do no wrong.  They start seeing problems creep up in the relationship, but they defend their love knowing that things will get back to "normal".  They often end up in a bitter divorce.
I think the problem with buying what you "know" is it amplifies whatever amount of Dunning-Kreuger effect you already have in your dumb monkey soul ("I know Apple stock is going up because I love my $1000 iphone and everyone must want one just like it")

You can avoid that if you set [and stick to] limits. 

CCCA

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Re: UBER stock
« Reply #20 on: May 23, 2019, 10:55:50 AM »
I wouldn't buy UBER yet, but that's just me.  I did listen to the first LYFT earnings call and I can understand why many are interested in the space.  I do think these companies have the potential to be an industry disrupter, but if and/or how that will play out remains to be seen. 

The amusing thing I've noticed about your everyday retail investors is how they gravitate towards whatever brands they recognize through personal use or through the media. I have spoken to several would-be "investors" at work with extreme tunnel-vision belief in a particular investment yielding certain profit (oil, cannabis, gold, Apple, Tesla). I though I explained the efficient market hypothesis pretty well once to the cannabis guy. He seemed to understand that all relevant information was priced into a stock; however, after our conversation, he still wanted to go buy some (stock, not cannabis!).

Yes, this poses many problems, namely that people don't set limits.  Peter Lynch recommends buying stocks you know (as do others, I'm sure) and I understand the suggestion, but for many, it's just a bad idea.  The average retail investor falls in love and then convinces themselves that the company can do no wrong.  They start seeing problems creep up in the relationship, but they defend their love knowing that things will get back to "normal".  They often end up in a bitter divorce.
I think the problem with buying what you "know" is it amplifies whatever amount of Dunning-Kreuger effect you already have in your dumb monkey soul ("I know Apple stock is going up because I love my $1000 iphone and everyone must want one just like it")


THis is definitely true of Tesla as well, maybe more than other companies.  People love the cars and love the 'mission' and can't see that the company is mismanaged and unprofitable.

PDXTabs

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Re: UBER stock
« Reply #21 on: May 23, 2019, 02:04:21 PM »
THis is definitely true of Tesla as well, maybe more than other companies.  People love the cars and love the 'mission' and can't see that the company is mismanaged and unprofitable.

Absolutely, but I know at least one fanboy owner that purchased TSLA stocks at $19.20/share because he loved his car so much he bought it right at the IPO. I have a different friend that did something similar for AMZN. I don't buy wildly unprofitable companies, but I've watched people do very well when they buy stocks in companies that they believe in because they use the product (including APPL).

Car Jack

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Re: UBER stock
« Reply #22 on: May 24, 2019, 08:59:55 AM »
Let's see....an overpriced company who has never, ever generated a profit....with drivers who are unhappy enough to call a strike day....and who has pushed themselves into some markets over the powers that be.  What could possibly go wrong?

A few things I can think of.  The muscled into Boston over the objections of the city and of course the taxi companies.  They got to stay.  Won the war?  Wait.  Massport (who runs Logan Airport among other things) tacks on new fees for pick ups and drop offs for ride shares.  Not so bad, right?  Oh, there's more.  Now, there's a central location that is the only place for drop off and pick up in Central parking.  So now when you get out of your Uber on a miserable, rainy day, enjoy your 15 minute walk in the rain with your luggage to your terminal.  Or take a taxi and be dropped right at your gate.

Massport runs a lot of other things.....like the Mass Turnpike and bridges.  I can very well see the first self driving Uber cars being banned on these.  So now, Uber self driving cars can't actually get to/from the airport.  State DMVs can also interpret the laws such that a car needs a driver to legally be driven.  Is there somewhere in the laws that say an autonomous vehicle is allowed to travel on public roads?  Any cop could take a fleet of cars off the road.  Put on the lights to pull over an autonomous car.  No pull over.  Pull in front to stop it.  Driver doesn't cooperate or produce a license (since there's no driver).  Cop has the vehicle towed.

PDXTabs

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Re: UBER stock
« Reply #23 on: May 24, 2019, 01:53:27 PM »
Massport runs a lot of other things.....like the Mass Turnpike and bridges.  I can very well see the first self driving Uber cars being banned on these.  So now, Uber self driving cars can't actually get to/from the airport.  State DMVs can also interpret the laws such that a car needs a driver to legally be driven.  Is there somewhere in the laws that say an autonomous vehicle is allowed to travel on public roads?  Any cop could take a fleet of cars off the road.  Put on the lights to pull over an autonomous car.  No pull over.  Pull in front to stop it.  Driver doesn't cooperate or produce a license (since there's no driver).  Cop has the vehicle towed.

I imagine that similar arguments were made right before automobiles replaced all the horse drawn carriages.

nereo

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Re: UBER stock
« Reply #24 on: May 24, 2019, 03:24:37 PM »
Massport runs a lot of other things.....like the Mass Turnpike and bridges.  I can very well see the first self driving Uber cars being banned on these.  So now, Uber self driving cars can't actually get to/from the airport.  State DMVs can also interpret the laws such that a car needs a driver to legally be driven.  Is there somewhere in the laws that say an autonomous vehicle is allowed to travel on public roads?  Any cop could take a fleet of cars off the road.  Put on the lights to pull over an autonomous car.  No pull over.  Pull in front to stop it.  Driver doesn't cooperate or produce a license (since there's no driver).  Cop has the vehicle towed.

I imagine that similar arguments were made right before automobiles replaced all the horse drawn carriages.

I thought something similar.

Let's look at taxi-drivers for a moment.  Thirty years ago a taxi driver needed three things: an intimate knowledge of the roads, an ability to operate a vehicle and a way for fares to 'call a cab'.  Local laws and regulations sometimes required additional things (medallions, special licenses, background checks, etc) - but none of those are strictly necessary to drive a person from point A to B.

The ability to operate a car has never been much of a barrier, as the majority of the public has been doing this for close to a century. With the advent of cheap smart phones and GPS the remaining barriers are gone. Everything that remains is just protectionist barriers to keep these companies and individuals solvent for a while longer.  It gets even more absurd when you consider that lots of people are tasked with driving packages or documents or corporate clients they've never met back and forth, and this has been going on for decades. 

I'm certain many entities like Massport can and will continue to make it challenging for ride-share services - temporarily.  But the horse is already out of the barn.  I don't see how taxi-cab services will be a thing in a couple of decades. Right now they are motivated by preserving jobs - but pretty soon it'll become apparent that such measures will be far more costly to businesses than keeping taxi drivers employed.

Car Jack

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Re: UBER stock
« Reply #25 on: May 26, 2019, 09:29:13 AM »
Taxi companies are going to have to get app based and some already have.  Customers are going to have to see where the taxi is, the pick up time and picture of driver and plate number of the taxi, just like Uber.  There's the advantages of Uber, in my opinion.  I want to know the vehicle is 3 blocks away and will be here in 2 minutes.  And I'm willing to commit to taking the ride when he arrives and if I cancel, it costs me money.

The easy part for software partners who develop apps for taxi companies is that it's already been done.  They don't have to be involved with the stupid surge pricing and other nonsense. 

The question is whether taxi companies and/or independents will latch onto an app that becomes universal.  If they do, I see zero advantage to Uber/Lyft. 

I don't travel much so can only relate my recent training trip to Phoenix.  Upon arriving in Phoenix, there were 8 of us.  4 of us went to the taxi area and immediately put our stuff in the taxi and left.  The other 4 collected their baggage earlier and had an Uber waiting.  We all got to the hotel.  For some reason, the taxi got there quicker by maybe 2 minutes (Chandler).  The taxi cost $40.  The Uber cost the other guys $60.  So yah...I know this is only one trip, but getting somewhere slower for 50% more money doesn't sound like an advantage.  I figure maybe there was surge pricing involved.  Maybe the Uber guy got lost or took a wrong turn.  Then the 10k view....Uber lost money on the ride (they lose money on every ride) and the taxi driver and company made money.  Not much of a business plan. 

I do know Phoenix is an autonomous vehicle friendly area.  We saw a number of them wizzing around near our hotel. 
« Last Edit: May 26, 2019, 09:35:01 AM by Car Jack »

PDXTabs

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Re: UBER stock
« Reply #26 on: May 26, 2019, 10:24:49 AM »
Singapore Taxis have an app. Since they are price controlled (and Uber/Grab aren't) all the locals know to check which fare is cheaper before ordering.