Is Uber a Good Investment?
Uber, a taxi-type service, is definitely a trailblazer in this tech age. Investors get excited over Uber because its growth is unstoppable. However, they’re some natural limits on this growth.
TheStreet.com’s opinion is that Uber may have met a natural equilibrium with taxi services, preventing Uber from further growth. This idea is likely to apply everywhere. It has been found that recently Uber drivers weren’t making much money, partly because Uber was overstaffed to serve a limited number of riders. Uber drivers must compete with fellow Uber drivers for business.
Uber claims to have much market potential. People are finding ways to use Uber rather than owning a car. It has been found that Uber took about 10% of taxi’s business in NYC, but it’s difficult to see where more business will come from.
Drivers typically underestimate their own expenses when calculating their potential take away from Uber. Gas, insurance, and maintenance need to be considered when thinking about owning a car. These expenses go up with use, so an Uber driver will have to replace their car in about a third the time of a normal commuter.
Eventually, Uber drivers find their expenses outweighing their benefit. This leads to many Uber drivers quitting the business. This doesn’t mean that Uber is not a beneficial service to customers. Uber cars are quick and easy and more likely to drive long distances.
These points should be considered by investors when Uber enters their area. It may encourage investors to enact rules to protect their taxi fleets from complete destruction, without entirely keeping Uber out of the business.
The evidence that Uber can’t continue grow endlessly should make investors think. Uber has many challenges ahead, including transportation and labor rules and regulations that may requiring employing their drivers, and paying them as such. It is still up for question if Uber is worth investing in.