Uber Losses: Consumer Tech & it's activity bubbles.


At the close of the 2nd quarter, 2019 Uber reported revenue of $3.16 billion and its losses were estimated at $5.1 billion with its share price struggling to keep pace with its initial offering of $45. It's competition, Lyft is suffering a similar fate; posting losses in the tune of $644 million. 
Bringing it back home on the e-commerce plane, JUMIA recently posted a loss of $120million and its share value fell to $12.73 from $14.

The question is 'why do promising ventures and highly effective consumer tech products, fail on the productivity scale? The collective loss for consumer tech was estimated in the United State to hit $14billion, with some valuation falling by 50%. Uber chalks their losses to peak investment year and as the price of growth, but analysts call for a review of the business model. The activity bubble creates a loss of energy and has exposed a chink in the armor of lifestyle tech apps. The amount spent keeping up with the consumer's lifestyle is way too much, plus scaling their business up will cost extra. With e-commerce, we face a similar yet peculiar problem. Wrongdoings in the Nigerian sales force work hand in hand with a logistical nightmare to expose a flaw and leeway for fraud.

The real problem is the subsidy paid to aid the lifestyles of the consumer isn't sustainable, and profit-seeking will adversely affect urban lifestyle and make it too expensive. Looking very similar to the 'Dot.com' bubble business models should be revised to find the needed balance between consumer offerings and the price paid for services. Importantly, growth should be organic, analysts often tend to be too optimistic in their initial valuation of consumer tech and lifestyle apps especially when its a hit with the market. Often times, when apps become popular with the consumer, business models employed are too ambitious resulting in a flash of the pan sales that are so to plummet like diminishing returns. Companies like Lyft are already hinting of a price surge as profitability to ensure they deliver their best services.

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