As Uber prepares to go public, we find out more about Uber Eats.
Imagine your restaurant lost hundreds of thousands and then someone offered you one million dollars for it. You probably wouldn't trust them, but if they came up with the money you most likely would take it in a heartbeat. Well Uber, which lost around $1.8 billion, yes BILLION, last year has filed to go public and could be worth as much as $120 billion. Would you like us to explain? There is no explanation. It is called the greater fool theory. So long as there is someone out there willing to pay more for something than you did, then it is valuable. Investors are betting that at some point Uber will makes lots of money and their shares will be valuable. Or perhaps a lot of investors who got in early are simply hyping Uber so they can get out at a huge profit and leave it to everyone else to fight it out. Anyway, this is not an investment advisory platform. We are more interested in what we learned about Uber Eats.
Uber Eats, which Uber launched about four years ago, generated $1.5 billion in revenue in 2018.
According to its IPO prospectus, 15 million people got a meal using Uber Eats in the fourth-quarter of 2018. More than 220,000 restaurants allow their customers to order their food for delivery via Uber Eats in over 500 cities globally. In additional to traditional brick-and-mortar restaurants Uber also works with virtual restaurants that produce meals or meal kits in commercial kitchens but do not have a front-of-room where they serve patrons.
Uber Eats plans to expand from 500 cities to 700 cities globally where it already offers ride-sharing, while also investing in its existing cities to expand the number of restaurants, drivers and consumers. The company is also looking into entering grocery and different types of food providers, such as cloud kitchens.
Uber Eats helps Uber tap into non-transportation revenue, and keep drivers on the Uber platform. During hours when there isn’t as much demand for rides from passengers, drivers can opt to make food deliveries. Further, Uber can put drivers to work on food deliveries even if they don’t have a vehicle that would meet the requirements for taking passengers around.
Only time will tell if Uber becomes a hugely profitable company. The company itself warns in its filing that "it may never become profitable". Like we said, profits are for suckers!