Anyone can drive big revenue by taking huge piles of investor cash and selling things below margin. That isn't magic. If that buys market share with a moat, it may make sense. If not, it's unwise.
What matters it the size of the shovel they are using (their expenses and subsidies) and the force of the wind that's refilling the hole with nearby dust (the customer revenues).
They can reduce their shovel without impacting the wind too much.
I don't see what Uber's moat is once self driving cars are common. It seems they will be fighting off competition (car companies, Waymo, etc) that didn't have to spend money on lobbying, lawsuits, subsidies, and so forth.
Self driving cars are just hype that won't be any significant for another decade. You should forget about self driving cars.
What Uber has right now is real, a massive customer base and network of taxi, that is bringing billions of dollars. They could totally focus on that and have a strong and sustainable business.
They bring you business. Yes, it helps you that the taxi can have a phone with lyft in the same car. It gives the illusion of choice and it gives an alternative to the driver.
In the end, your business has 90% market share. It's not going away overnight. Market share is actually self sustaining and it's giving you a strong edge for the future.
Competitors don't have 1/10th of the cash. If they get try to compete on subsidies, they'll get a peak of traffic and run out.
"Sell at a loss but make it up in volume" probably doesn't work well for many :)
The bigger thing, though, is that you keep implying that I said Lyft was somehow in a better spot. Now you're noting I never mentioned Lyft.
Nothing I'm saying is affected one way or other by Lyft. Pointing out that they have the same problem doesn't change the rationale.
Revenues growing exponentially from 2012-2015. The revenues in 2015 were even higher than the predictions done 2 years earlier (that were actually planning for a steep exponential).
At this rate of growth. They should be making 1-2 billion in revenues per quarter now. Wish we had a recent leaked document.
That's a solid multi billion dollars business. Worse case scenario if they run out of subsidies: Stop distributing tons of incentive in unprofitable markets + fire half the staff (they have too many anyway) = back to positive.