Exploring Uber’s Market Trends

Whether you’re running an errand across town or exploring a city far from home, chances are you’ve turned to Uber at some point. Uber has changed the way people travel, making it much easier to move around a city. You can instantly connect with a driver through the Uber app on your mobile phone. It’s a convenient and affordable taxi service as well as available whenever you need it.

Ever wondered how Uber sets its prices? Well, this is how it works… the company sets prices based on the number of riders and drivers available in a certain area.

Did you know that you can find Uber in around 70 countries, and 10,500 cities and that over 131 million people use the app every month? Impressive, right? The transportation company also has a huge number of drivers, with around 5.4 million active drivers worldwide. The company provides an average of 23 million trips each day across all its services.

In its last annual earnings report (2022), Uber recorded 7.6 billion trips and $31.9 billion in revenue, but also a net loss of $9.1 billion over the same period.

In this article, we will explore the significant trends that have shaped Uber’s journey and examine its recent stock performance.

About Uber

Uber was founded in 2009 under the name of Ubercab and quickly became the world’s most valuable startup. By 2022, Uber’s taxi services occupied an impressive 71% market share in the United States. In 2023, Uber’s food delivery service, Uber Eats, held a 23% market share. In 2011, Uber expanded nationwide, all across New York City. Throughout its decade-long journey, Uber has achieved significant milestones and expanded globally.

Uber’s beginnings

The idea for Uber originated when two friends, Travis Kalanick and Garrett Camp, couldn’t get a taxi in Paris one winter’s night. Frustrated with the traditional taxi system, they developed a more convenient and efficient way to get a ride. They launched a mobile app that connected passengers with drivers who offered rides in their cars. On July 5, 2010, the first Uber customer requested a trip across San Francisco.

Initially called “UberCab,” Uber’s app gained popularity quickly due to its simplicity and convenience. With just a tap on the screen, users could quickly request a ride.

Expansion and funding  

In 2010, Uber received a $1.3 million investment which was its first major funding. The following year it raised another $11 million. Uber expanded its services to New York, Seattle, Boston, Chicago, and Washington, D.C., as well as to Paris, where the idea for Uber first originated.

At the LeWeb conference in 2011, Uber raised $37 million in financing. In 2012, the company introduced UberX, offering a more affordable option with hybrid cars as an alternative to the luxury black car service.

Uber’s journey from 2015 to today

In July 2015, Uber became the world’s most valuable startup, valued at a massive $51 billion. It raised an extra $3.5 billion from Saudi Arabia’s sovereign wealth fund in 2016.

In the following years, the company faced major challenges, a $3.8 billion global loss in 2017 and a drop in valuation from $68 billion to $48 billion in 2018. To deal with these challenges, Uber secured an important deal with SoftBank Group. The deal resulted in SoftBank acquiring a 15% share in the company. The rest of the shares went to other investors in the group. During this period, Uber faced various challenges, including a fatal crash involving one of its self-driving vehicles and regulatory obstacles by New York City to pause new licenses.

In May 2019, Uber went public with its IPO, but it faced a huge drop in valuation and had the biggest first-day dollar loss in IPO history in the United States. Despite these ups and downs, as of April 2023, Uber’s market capitalisation stands at over $63 billion.

Stock prices are up

The revenue for the last quarter of 2022 increased 49% year-over-year, while the net income was $595 million.

Uber’s CEO, Dara Khosrowshahi, said that the company had its “strongest quarter ever,” capping off its “strongest year.” He emphasised that the impact of the pandemic on Uber’s mobility business is now in the past, with the number of active drivers reaching a record high during the quarter. He mentioned that the company also achieved a new milestone by completing 2 billion trips in a single quarter for the first time. This represented approximately 1 million trips per hour.

Outlook for 2023

The company expects gross bookings to increase between 20% to 24% year-over-year for the first quarter of 2023.

Uber Eats delivery business grew considerably during the Covid-19 pandemic. However, revenue from its transportation business was greater than Eats revenue in the last three quarters of 2022 as people started travelling more. This trend continued in the following quarter, with the transportation segment earning $4.1 billion in revenue and delivery bringing in $2.9 billion. Uber’s freight business also brought in more than $1.5 billion during the same period.

However, more recently Uber had to cut 8,000 virtual brands from its app. Virtual brands are not brick-and-mortar restaurants, but menus created for delivery only. These virtual brands increased massively during the pandemic but now with delivery apps and consumers becoming more aware of them and their lack of accountability, they have lost their appeal. Their food is prepared inside “ghost kitchens” or by restaurants that want to increase their delivery income by selling a different food brand online. As Uber Eats told Insider in a recent interview, they came across restaurants with a virtual brand with the same menu. Such a thing drove them to rethink their virtual brand strategy.

Uber Eats had 40,000 virtual brands on its site at the start of the year. However, to remove all these doppelgänger online menus, Uber Eats now requires that the virtual restaurant’s menu be at least 60% different from the “parent” restaurant and 60% different from any other virtual restaurant operating from that same address.

Final thoughts

Throughout its history, Uber has faced different challenges and experienced various trends. Despite fluctuations in its stock performance, the company’s recent financial performance has been positive, giving confidence to investors. If the company continues to innovate, diversify its services, and adapt to the changing transportation industry, the company will continue to be a major player with huge potential for future growth and success.

Disclaimer:

This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked, in this communication.