Earlier this week, a confidential financial document issued by Uber as part of its fundraising effort last year, was leaked to The Information. The documents are certainly eye-catching. Uber's revenue is soaring--it took in $2.1 billion in the first half of 2014, nearly as much as it did in all of 2014--but losses are widening just as dramatically. The ride-hailing app lost close to $1 billion in the first half of 2015.
These are big numbers, but they shouldn't be especially surprising to anyone who has been paying close attention. After all, Uber has been on fire here in the U.S., crushing the competition in cities such as New York and Los Angeles. It has also been pouring money into Asia, where it faces entrenched rivals and a tougher slog.
What's more shocking are the company's projections: If the Information's story is accurate, Uber CEO Travis Kalanick expects to be pulling in more than $8 billion in profit by 2019. That's a huge number--designed, no doubt, to pique investor interest.
But is it realistic? To know the answer, these questions need answering first:
1. Exactly when will Uber be profitable in developed countries?
The report says that according to "a person familiar with Uber's thinking," the company "could be profitable overall in its developed-country markets starting this year." Now, developed-world operations include the United States, Australia, Israel, Japan, U.K, and most of Europe. When will be the tipping point for these countries--especially ones in which Uber is losing a lot of money due to passenger refunds and recruitment promotions for drivers?
2. What's Uber's market share in China, and how fast is that growing?
Uber co-founder and chief executive Travis Kalanick can't stop talking about China lately. But he won't say how Uber is doing compared to its main China competitor, Didi Kuaidi. He's said there are as many rides taken in China as in the United States--each are about 30 percent of Uber's total riders globally. But it's unclear how many riders take Didi, or other services. Reuters reported that Uber has about 30 to 35 percent of the market share in China. Even if that's correct, it's just as important to know how much the company is chipping away at the lead Didi and other services already have.
3. What's next after China and India mature for Uber?
Uber has grown extraordinarily quickly over the past five years. Experts I've spoken with are quick to question how long this sort of growth--sometimes 40 percent month-over-month--can be sustained. Perhaps another year, at most, as its markets mature and settle into holding patterns of slow growth (for example, user-acquisition growth is, not surprisingly, already slowing). After sweeping in and dominating developed countries so quickly, China and India are now Uber's big focal points. Then onto... what, exactly? Self-driving cars, which the company is already sinking resources into, is certainly one option. But it's not one without competition--Google and GM aren't going to take this one lying down.