The problem here is that ridership at current prices is rather higher than ridership at 2x current prices... and 2x current prices only brings you up to break-even. you want to bring that up to the point where Uber is making billions? ridership is going to fall off a cliff.

I use uber a lot mostly because it's really cheap; For five bucks? yeah, for five bucks, I'll have someone drive me to work. if that goes to $10 or $20? Yeah, I'll still use it when I go to the bar or when my car is broken or something, but for that kinda scratch I'm probably taking a shuttle, driving myself, or using a bicycle to go to work.

The point here is that Uber's competition isn't really lyft or the cab companies, it's the car I have sitting in my own driveway.

More specifically, if Uber is able to deliver rides cheaper than everyone else, at a cost to them that is even cheaper than that, they can make a ton of money. If it's the other way around, they lose a ton of money instead.

That isn't true - they're profitable in a lot of markets[0]. They're subsidizing rides in new and developing cities where they're capturing market

[0] https://www.businessinsider.com.au/uber-profitable-in-hundre...

Have you actually studied Uber’s recent earnings? I’m pretty sure rideshate contribution margin is positive in all their tenured markets.

Because the market is insane.

Uber has yet to prove that their core business can actually make money. A large part of the appeal of Uber is that they're cheap, nobody has proved that customers are willing to pay enough for an Uber for them to turn a profit.

I'm legitimately surprised that they're _still_ not making profit on ride sharing. I just kind of assumed that the insanity had stopped. Running at a loss to gain marketshare is a fine and reasonable strategy if you think you actually have a plan to make money later, so far Uber's plan is to spend even more money expanding to other related markets hoping for profitability. I would never buy shares in Uber.

AFAIK in mature markets they made a profit

That gets insanely expensive in their most profitable city as you not only forgo profit you also need to drop the pice enough that people pick you. And it’s never going to be just one company in just one city that tries to compete. The might be able to pull it off, but not while being a 100 Billion dollar company.

Remeber, long term their options are be profitable or fail. They can’t continue to attract money if they had a monopoly and still can’t be profitable.

The pitch for Uber is that operating at a loss and aggressively capturing the market for point to point transit eventually puts their competition (mostly Lyft, often regional startups since the real opportunity cost to make an Uber competitor is so low) out of business that lets them jack up their prices.

Basically, aggressively monopolize markets and then drive prices up until competition resurfaces, run in the red until competition dies first from less cash on hand, then resume exploitation.

Its also hedging that self driving tech is far out enough to keep reaping profits from this cycle for some time. In the same way people go to Amazon first to buy something in many cases, Uber predicts with enough domination of the market for long enough people will just always go to Uber first for transport regardless of if actual better options exist at some point.

Please stop repeating this, or at least find a source that supports it. There's a big difference between "losing money in the aggregate" and losing money on each ride; the latter is only true if the marginal costs of providing each ride are greater than the revenues from it, and the source in [1] only reports the former kind of loss. It's very unlikely that each ride is actually costing them the ~$4 they take from it; that would be some pretty inefficient IT.

If you want to view it that way then it's both drivers and Uber that's losing money.

I do Lyft on the side over summer as a poor grad student. I only have 3 pool ride and those three the passenger didn't have to share any ride with anybody and I made less than if those ride were not pool.

You're also implying that in the long ride Uber will win if it works as if the speculative end will justify the mean.

Which, personally, I think a flaw and weird way of seeing it.

That’s a dangerous assertion when Uber spent a sizable chunk of its investment money on promotions to make rides available at less than cost. Selling services below cost and competitors price is a way to gain market share that does not prove that your business model is in any way superior.

I agree with your broader point, but Uber lost some 8.5 billion USD last year. They're not (yet, at least) making bucketloads of money, despite paying their workers badly.

Yes and no, they are in a space which is extremely price competitive. I literally am watching Uber take a dramatic hit in my area right now. Lyft came to town and probably 80% of the drivers solely use them now, driving up the Uber prices.

Now, I only use Lyft - as do most of the people. Plus, most of the Uber drivers are shady here and the people think Ubers a snaky company.

I realize this is ancidotal, but everywhere I go (I travel a lot, switching between Uber and lyft), Lyft seems to be more popular among drivers and riders. They simply don't use it because of price/market share. However, adjust the price or driver's and the equation changes.

I honestly still don't see them making it out of their situation.

Uber lost $8.5 billion dollars in 2019. Think about that. Uber is losing the better part of a billion dollars every month. They are hemmorrhaging money at their current prices. It will cost a lot more for this to be profitable when you consider how much more expensive this will make the drivers.

In the quiet words of the Virgin Mary, [citation needed].

Uber has invested millions of dollars into something. One of those things is, undoubtedly, expanding. One of the facets of expanding is, undoubtedly, lowering fares.

Does this mean that an uber-like service must run at a net loss in order to provide their service? Of course not.

did you not read the article? the entire thing premise is that is not true and there are negative externalities and incentives even if the company doesn't ever make a profit.

Apples and oranges. Tesla is losing money because they are investing massive amounts of capital to improve their supply chain and production capabilities. Uber is losing money because they subsidize rides to try to push competitors out of business. Tesla is actually profitable. Uber? We don't know.

Your mistake (I think) is that you are connecting the costs to the prices on a per-trip basis.

In the hyper-growth phase where the objective is to gain mindshare and market share, their VC and IPO cash can be used instead of charging reasonable prices.

For your scenario it’s entirely possible that the price of the ride is $10 but the cost of the ride to the driver is $12.

Uber's ride-hailing business is profitable. They lose money because they subsidize Ubereats.