Uber plans to position itself as the next Amazon, when its IPO road-show kicks off later today. Per Mike Isaac of the NY Times:
Just as Amazon began as a modest online bookseller before growing into a digital retailing behemoth, Uber wants people to believe its ride-sharing business is the foundation for a larger “platform” spanning multiple transportation industries.
Let's do some Q&A:
Q: Why did Uber pick Amazon over Google, which expanded far from its search engine roots?
A: Because Amazon was unprofitable when it went public, whereas Google was already printing cash. Plus, Amazon and Uber share a tactile customer delivery experience, whereas Google remains largely digital.
Q. Why pick Amazon over Lyft?
A. Because Lyft's stock is getting hammered in the IPO aftermarket (-20.5%). In fact, it closed trading Friday with a lower market cap than Zoom Video. Plus, Uber does legitimately view itself as a much more diversified business, in terms of both geography and product offering.
Q: Why are investors likely to laugh?
A: Amazon's annual loss was only around $3 million per year on less than $10 million in annual sales. Uber is estimating a $1 billion net loss on around $3 billion in revenue for just the last quarter. It could be tough making a growth comparison between a seedling and a fully-mature tree, which has been a longstanding argument against the "stay private longer" strategy.
- Amazon was only three years old when it went public, whereas Uber is now in its second decade.
Q: Why are investors likely to stop laughing?
A: Because many of them also didn't believe in Amazon, whose shares took five years to ever hit the $100 mark. The FOMO is strong with this one. Plus, Uber may persuasively argue that the comp is more about long-term investment strategy than about present-day income statements.
- ICYMI: On Saturday we ran an Axios Deep Dive into the on-demand economy. Check it out here.