Investors Still Confident In Uber Despite Its Problems
December 15, 2017 Leave a comment
It’s no big news that Uber has had a rough 2017. From harassment scandals to activist investors to regulatory troubles, the ridesharing company has had a lot of challenges in the past year. But despite all of that, investors remain confident that the $70 billion company is poised for growth.
“We’ve seen it over years and years, and I think [former CEO Travis Kalanick] has learned some very challenging lessons,” said William Ford of General Atlantic, one of the firms that has invested in Uber. “But the good news is he is learning. I think he’s taken good counsel from his board and some of his investors, and he’s got our confidence.”
But the company’s challenges aren’t over yet. The transport regulator in London recently refused Uber’s license renewal bid, a decision the company says it plans to appeal.
Regulatory agency Transport for London cited Uber’s approach to reporting serious criminal offenses and failing to do background checks on drivers as reasons why the company’s license renewal bid was rejected.
The GMB, Britain’s general trade union, and the London Taxi Drivers’ Association may participate in the case, too, if Westminster Magistrates’ Court Chief Magistrate Emma Arbuthnot agrees to allow it.
A hearing on the case is scheduled for April of 2018, but that may be pushed back due to scheduling issues. Meanwhile, Uber’s 40,000 London drivers will be able to continue taking passengers until the appeals process is exhausted—a process that could take years.
In an attempt to get its licensing back on track, new Uber CEO Dara Khosrowshahi apologized to Londoners and met with Transport for London Commissioner Mike Brown for talks.
On December 10, an Uber spokesman said, “We continue having constructive discussions with Transport for London in order to resolve this. As our new CEO, Dara Khosrowshahi, has said, we are determined to make things right.”
Regardless of the troubles in London and the issues simmering in the company itself, investors are still feeling that the company has something to offer.
In addition to General Atlantic, Uber has attracted investments from the likes of Goldman Sachs, Dragoneer Investments, Chinese ridesharing service Didi Chuxing, and Saudi Arabia’s Public Investment Fund. Why? Because the company’s troubles will pass, and they’re banking on the fact that Uber remains a worthy investment.
Many investors believe that after the drama and shakeups of 2017, the company is poised for growth. It’s certainly been growing this year, with Q2 results showing revenue of $1.75 billion, as compared to Q2 2016, when the company’s revenue was a mere $800 million. Not only that, but global trips are up 150 percent from Q2 2016.
Uber has also received sign-off from the SEC to change the description of its business model to one in which the company is merely an “agent” and its customers are the drivers, not the passengers. This would mean Uber could report financial results without disclosing how much drivers are being paid, thus allowing it to report only the net transaction revenue that goes to Uber, leaving out the driver’s compensation. This change hints that an IPO may not be far off.
With numbers like that and the strong potential for an IPO in the near future, it’s no surprise that investors remain confident in the ridesharing company.
You must be logged in to post a comment.