From the valuation of 100 billion yuan to the end of the listing, Uber’s growth path is full of twists and turns.
Editor’s note: This article is from Huasheng Securities, author Lin Hai.
As a global network car leader, Uber has been sought after by many capitals. The valuation was as high as 120 billion US dollars. The company was listed on May 10 this year at a discounted market value of 75.4 billion US dollars. Not only that, after the listing, the stock price fell sharply. In the four months, it fell more than 20 billion US dollars. In early October, the market value once fell below 50 billion US dollars. How can Uber in the predicament reverse the trend?
Source: Huasheng Securities
Quarterly loss of 5.2 billion, scale vs. profit theory
The company CEO said in an interview in August that the company’s profitability will depend on the continued expansion of its scale: “As long as your business has a multi-trillion dollar market size in transportation, food and global commerce, a company In other words, investment is meaningful.” In fact, the company’s scale has grown considerably in recent years. With the increase in the number of taxi orders, from the Q2 in 17 years to the Q2 in 1919, the number of active users on the platform increased from 99 million to 99 million, with a growth rate of 73%. During the period, the number of trips increased from 889 million to 1.677 billion. For 99%, adjusted net revenue increased from US$1.63 billion to US$2.873 billion, an increase of 76%.
Source: Corporate earnings, Huasheng Securities
However, the CEO’s theory of profitability by scale needs to be tested. In fact, while the scale is expanding, the company’s losses continue to expand. According to the latest financial report, the company’s loss in the second quarter exceeded $5.2 billion, and the average daily loss was 400 million yuan based on 30 days per month. Although it includes $3.9 billion in one-time listing-related expenses, the remaining 1.3 billionThe dollar loss is still 50% higher than last year. As shown in the chart below, the adjusted EBITDA reached a new low of -8.69 million USD in Q1 in the previous quarter. The loss reduction trend from the end of 17 years to the beginning of 18 did not continue. The loss reached the highest in Q1 in 19 years, and the loss in the second quarter decreased, but also in The loss in recent years has been high.
Source: Corporate earnings, Huasheng Securities
The hidden worry outside the loss
The market value has fallen sharply. In addition to the impact of large losses, the decline in the growth rate of core business income has also worried the outside world. In 2018, the company’s revenue was $11.3 billion, a year-on-year increase of 43%. The growth rate of taxi service as the core business has slowed down significantly. The latest Q2 quarter taxi service revenue is about 2.348 billion US dollars, and the year-on-year growth rate has dropped from the low two digits at the end of last year to 2%. At the same time, the new business has grown rapidly. However, the scale is still limited. In the latest Q2 quarter, the largest share of the take-away business revenue increased by 72% year-on-year to US$595 million.
Source: Public Network, Huasheng Securities
survival space under supervision
Like domestic DDT, the company faces constant regulatory pressures everywhere, and the market and profitability may be dragged down. On September 11, the California House of Representatives passed the iconic AB 5 bill with 61 votes in favor and 16 votes against. If it is implemented, the temporary worker will become an employee. Because this part of the cost is large, the bill will seriously affect The company’s profitability.
In addition, the company faces large compliance costs everywhere, even as large as cities. For example, New York imposed restrictions on the free time of the network car in traffic jams in Manhattan; on September 24, the company’s application for a formal private lease operation in London was again rejected by the regulator. On the whole, in response to different regulatory policy barriers, companies need to focus on mitigating policy risks before they can consider survival issues.
Conclusion
The giants of the once-billion-dollar valuation have now fallen below $50 billion, behindThe negative factors of the company’s business/finance side include the decline in core business growth and ongoing losses. Not only that, but the company is also facing more serious regulatory risks, and the living space may be further compressed.