Uber intensifies its global transportation ambitions ahead of going public

Open this photo in gallery:

Uber Technologies Inc. is positioning its business to become the Amazon.com of transportation, a platform where a consumer will one day be able to summon any form of getting around, from bikes to commercial trucks, with just the push of a button.

But can the ride-hailing startup convince investors it can become the world’s largest transportation company ahead of an expected public offering this year?

Inside Uber’s San Francisco headquarters last week, the company laid out for a handful of journalists its vision of a massive global transportation platform. In the future, consumers will be able to open a single app and choose to summon a car, rent an electric scooter, buy a ticket on public transit or book a seat on a commuter aircraft, all while also ordering food delivery and shipping goods across country on a transport truck.

“We think of it as an all-of-the-above approach,” said Nundu Janakiram, who oversees rider experience at Uber. “Our hope is that if you zoom out and think about the customer at a big-picture [level], things like how our business performs will follow, because customers can hopefully only rely on Uber to get them from point A to point B, regardless of how precisely they get there.”

The push to showcase Uber’s global transportation ambitions comes as the ride-hailing behemoth is readying itself to go public in what is expected to be among the largest of a slate of high-profile initial public offerings in Silicon Valley this year.

Uber has invested heavily both in expanding its ride-hailing business globally in regions such as Latin America and India and in new forms of transportation.

Open this photo in gallery:

It overhauled its app for drivers last year and introduced loyalty programs for riders and drivers. Uber Freight, an app-based service that connects commercial truckers to shipments launched in 2017 and has signed up “tens of thousands of carriers,” said Eric Berdinis, product lead for Uber Freight. The company bought electric-bike-sharing company Jump Bikes last year and is working to create its own electric scooter.

It plans to test out using drones for its Uber Eats food-delivery service in San Diego. Earlier this month, one of Uber’s aerospace partners unveiled a full-scale model of an electric aircraft designed to be used for the air taxi service Uber hopes to launch in Dallas and Los Angeles by 2023.

Eventually, it hopes many of its services will use autonomous vehicles. Air taxis, for instance, could be autonomous as early as 2028, said Mark Moore, engineering director at Elevate, Uber’s proposed aerial ride-hailing service. The company restarted its self-driving car last month after suspending it for several months when one of its vehicles fatally struck a pedestrian in Arizona.

Uber’s plans inevitably invite comparisons to e-commerce giant Amazon, a company that convinced investors its global ambitions held potential for massive profits in the future, despite years of steady losses. Bankers have reportedly told Uber it could go public at a valuation of US$120-billion, even though it continues to lose huge sums of money – US$1.07-billion in the third quarter of last year alone.

Selling investors on its vision of becoming the Amazon of transportation “is the difference between Uber being worth $30-billion and $130-billion,” said Evan Rawley, associate business professor at the University of Minnesota. “Can they actually make money doing this thing?”

Uber’s push into so many lines of business – including some that are still years away from becoming a reality – will make it harder for investors to value the company, said Kathleen Smith of Renaissance Capital, which provides research and IPO exchange-traded funds.

Open this photo in gallery:

“It’s not a positive to have so much happening where investors are going to have a difficult time putting a value on all the pieces – and those are pieces that aren’t earning money.”

At the same time, unlike ride-hailing – an industry that Uber pioneered – many of its new transportation businesses, such as bike-sharing and food delivery, are already highly competitive.

There are already “countless” companies like Uber Freight that are trying to disrupt the commercial transportation industry with technology, said Anne Goodchild, founding director of the Supply Chain Transportation and Logistics Center at the University of Washington.

But trucking is more specialized than ride-hailing and Ms. Goodchild says the firms that have in-depth knowledge of the commercial freight industry will prevail over those tech companies focused on building the best app for truckers.

Uber is facing added pressure from ride-hailing competitor Lyft, which has also filed to go public this year and whose business is more focused on ride-hailing in the North American market, compared with Uber’s global ambitions. “Lyft’s focus is pretty narrow and it’s deep,” said Santosh Rao, head of research at Manhattan Venture Partners. “They have a clearer path to profitability. They didn’t have any of the self-inflicted wounds like Uber did,” such as the company’s management shakeup after allegations surfaced of widespread sexual harassment within the company in 2017.

But the biggest risk to Uber’s vision of becoming the world’s transportation app is the potential for a backlash from governments, which could step in to prevent a private company such as Uber from building a monopoly.

“I think the risks to any company trying to do this is largely: How will the institutions respond?” said Susan Shaheen, co-director of the Transportation Sustainability Research Center at the University of California, Berkeley. “How will individuals respond? How will the markets respond to a company having that level of control over the supply and demand of the transportation system?”

Editor’s note: Uber plans to launch an air taxi service in Dallas and Los Angeles by 2023. An earlier version of this article incorrectly named Denver.