Why Does Uber Need to Go Public?
by John Lawrence, April 30, 2019
They have a driver's app and a rider's app which are downloadable to your phone at no cost. Every time a rider calls for a ride and gets picked up Uber collects roughly half the money. This is all done by credit card. It costs Uber basically nothing. It's not like they have to hire a cashier. It's all automated. So aren't the apps in and of themselves money making machines that need no maintenance and hardly any human intervention? So why do they need an infusion of cash by going public? Is it that the owners want to be converted instantly from millionaires to billionaires? That's part of the story.
The other part of the story is that Uber has been losing money every since it went into business. You might ask how is that possible? All they have to do is sit back and collect tolls, and they don't even need to pay the person in the toll booth. Just like the person who makes an incredible amount of annual income, but spends even more than he makes, thereby losing money, Uber has been spending more than it makes profligately burning through cash on such money losing projects as self driving cars, scooter and bike rentals and food delivery. Not content to sit back and collect tolls, they want to take over even more businesses. They want to expaaaaand. It's the competitive American horror story that we live in. It's like Satchel Paige saying, "Don't look back. Somebody might be gaining on you." Who that someone is in Uber's case - is Lyft. Uber and Lyft are competitors. So Uber has to be always growing, always expanding because Lyft might gain an edge on them.
This keeps prices down for riders and increases the payouts to drivers. Just the other day Uber gave me, an Uber driver, $100. They didn't say what it was for, but, after googling around, I found out that it was because they were going public on April 27, the day the money went into my account. What's more they are setting aside a portion of the IPO shares, shares that past IPOs only gave to rich people, for the drivers themselves! So I may get to buy some Uber shares at the IPO price before they even go on the market. Isn't capitalism great?
So what will Uber do with this infusion of cash? Some of it will go into the pockets of the owners, undoubtedly. Some of it might go to pay off debt, and some of it will probably go into more cash burning endeavors. No one is ever content to just sit back and let the money roll in. Look out Uber, Lyft might be gaining on you. Truth be told I drive for both Uber and Lyft.
