The overall worth of Uber Technologies is declining, but could it someday end up like Yahoo? This article by Reuters says yes. After all of the regulatory debacles the rideshare platform has endured during the past year, plus the entire fiasco surrounding CEO Travis Kalanick’s departure, Uber is reportedly on a slippery slope—all that before we even get an initial Uber stock IPO.
Uber Technologies—A Sinking Ship?
Yahoo started as a pioneer and wound up a mere holding company. Uber Technologies could be embarking on the same path. In the heady days of 1999, Yahoo’s market value soared beyond $100 billion. Last month, the company offloaded the last vestiges of its online business to Verizon Communications for $4.5 billion. What’s left under the rebranded $56 billion Altaba is stakes acquired long ago in Jack Ma’s Chinese e-commerce goliath Alibaba and Yahoo Japan, along with about $11 billion of net cash.
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From a $68 billion value reported in 2015, Uber’s overall value has dipped into the $50 billion range, according to the Reuters article. There have been speculations that the ride-hailing giant has been in rough waters even before Kalahnick’s resignation, and of engineers jumping ship amidst all the fiasco. Uber gave in to Chinese company Didi Chuxing after a rumored $2 billion dollar battle. While selling off its China assets has been regarded as a generally good move, it took too much money on Uber’s part.
Missing out on diamonds while collecting a bag full of stones is the underlying theme of Yahoo’s downfall narrative, and a lot of people are afraid that the same fate awaits Uber technologies, especially considering that it’s still hemorrhaging cash.
Uber Technologies | Free-falling or Restarting?
#startup San Francisco, Los Angeles Want Uber to Pay $15M More for Violating Settlement https://t.co/f5WV0kwa60 #uber pic.twitter.com/cTgA5TGR8s
— startupcrunch (@startupcrunch) August 7, 2017
Even a simple bystander can’t help but notice the fact that Uber’s stock price fell in May, with major investors marking down the value of its shares. This in itself is salvageable, but what could ultimately lead to the company’s downfall is the dreaded “short sellers”.
Regarding this, Slate quotes Andrew Ross Sorkin’s book, Too Big To Fail:
The problem, according to CEO Dick Fuld, was that short sellers—people who bet that the stock price would decline—drove the stock down so far that lenders wouldn’t deal with the company and clients withdrew their capital. In just a few days, Lehman went from one of the biggest banks in the world to a company that couldn’t pay its bills.
What happens if the worst case scenario plays out and Uber Technologies actually go belly up? CNBC news describes a world post-Uber (employees and drivers might want to pay close attention to this):
- Investors would be fine, but employees and drivers might face unemployment until another company fills the void
- Big companies would have an excuse not to take risks anymore
- Promotion of diversity and better HR in the startup culture
Regardless of such speculations, the consensus is that it’s not too late for Uber. Some attribute these mishaps to growing pains: a harrowing, public lesson on how to run a business. Maybe this is not a downfall, but a rebirth, a chance to purge all the wrongs and start anew.
Uber Technologies—What Lies Ahead?
Good-Luck & much success Ms Bozoma Saint John. “The woman tasked with fixing #Uber‘s image.” https://t.co/FR1BIuYiuf ~~ @CBSThisMorning
— Tina Little-Coltrane (@TLC4_Life) July 28, 2017
After suffering a hard hit with sexism and harassment allegations, Uber is searching for a female lead to augment its credibility. However, female CEOs are not interested. Among the rumored choices were Facebook’s Sheryl Sandberg, YouTube’s Susan Wojcicki, and HP’s Meg Whitman—all of whom declined the offer.
Where does Uber go from here? No one knows for sure. Whether you’re a driver or a rider, all you can really do is stay updated and informed, and keep a close watch on what the company does in the succeeding months.
WATCH: What is the future of Uber and other ride hailing companies? Watch economist Alexandra Suich make an informed forecast of the CNBC report below:
Will Uber suffer the same downfall Yahoo did? Will they cave and give up market share to competitor Lyft? Share your thoughts below and let us know.