Okay, well if you've been calling more ubers to
get around recently, you're not alone during the first
quarter of the year, the ride hailing giants on
18% jump in trips compared to the same time last
year and Uber sharing news of the increase in its
earnings report this morning along with the beat on Wall
street expectations for its top and bottom lines. Now
, the company also announcing it will not have to
offer incentives to keep drivers on the platform, which
is something that its rival lift has said it will
do a lift shares dropping drastically following the news of
those incentives and today shares of Uber and Lyft both
Down notably despite a higher market, I mean,
lift down 29%, nearly 30%. That is one
of the roughest days that we've seen post earnings since
Netflix's own report and then uber down 4.3%. So
pretty notable losses there. But joining me now is
Howard, you lego professor of management and Innovation at
IMD Business school. Howard, it's good to see
you, uh, so Uber sharing at these mobility
revenues for the quarter, surpassing delivery revenues for the
first time since the start of the pandemic, what
kind of indication does that signal as to the future
for Uber's business this year? I mean, the
worrisome thing is despite the surging revenue, we see
Uber is still making a loss and primarily because of
the investment that they have been making a grab in
other hot startups, they're all taking a plunge.
So there is this investment right off happening. But
I think the broader story is here is that investors
and the financial market are really looking at solid earnings
going forward just because you're sustaining top line growth is
no longer enough. And that brings us to the
second story you just mentioned lived because they said they
would invest in more driver incentive, the financial market
just panic. They don't see this as a sustainable
strategy going forward. So what does this mean for
lifts business? Obviously Uber taking it on the chin
butt lift, feeling the pressure even more. We
know that there is one key differentiator. Howard between
Lyft and Uber. Lyft is exclusively ride hailing I
think in 2020 the key phrase that investors and financial
markets looking at at is business diversification And in a
way that Uber is slightly better than lift. But
fundamentally if you're thinking about living Uber, these are
platform businesses and so in platform businesses, there's always
this natural monopoly. There's only one google search engine
, there's only one twitter and there's only one facebook
in a sense. So if you're looking at the
right helling why we have two competitors because investors in
the past have been happy throwing money at them,
that was a temporary moment. So going forward,
it is worrisome, how can a limited market can
accommodate two giants at the same time. Right?
So in and after earnings call today, Uber Ceo
speaking on lifts own struggles without mentioning the company by
name saying quote, you heard, I think last
night one of our competitors in the U. S
. Having challenges were at least looking to lean into
drivers supply Are active drivers in the us and Canada
are up 70% on a year on year basis in
April and it is because we're bringing it new drivers
on not as uber rides, but as uber eats
and of course as uber as a platform and to
earn any way, shape or form on the platform
. End, quote, what are your thoughts on
those comments? I mean, it's interesting that you
know, Uber is busy distancing itself against its competitor
, right? And everything they said is trying to
project itself as being future ready and then I am
the old executive these days talking about is, we
don't know what kind of next crisis is going to
unfold, there is so much uncertainty going around,
inflation, interest rates, etcetera, but all they
know is they need to build up future capability to
buffer themselves against the words and this is the Uber
positioning right there essentially saying, look, we have
no trouble getting drivers in and you know, we
will continue to grow our Uber eats business and that
is a projection that they have something to build towards
in the future, using the healthy earning to plow
back to the future business With a 30% drop in
the stock of Lift. Howard do you think that
lift could be a potential takeover target for another company
? That is such a billion dollar question. Right
. But one possible outcome you can see like LyFT
has to getting into business diversification period. You're looking
at the tech sector, right? If you're a
one trick pony, you do like netflix. Spotify
the list, go on and for left for them
to build online food delivery business on their own is
almost impossible. Too expensive. Too late. By
now, it could be a potential merger with a
big online giant. That could be a perfect combination
. Perhaps we'll look at prices certainly up across the
board. Howard any indication that the Fed's policy might
impact the future results of both Uber and Lyft knowing
that the Fed is set to aggressively raised rates even
though not perhaps um, as aggressive as investors had
feared. Yeah, I think that really will trigger
a complete change of the market environment. Um,
once our interest rate is set to be higher or
the expectation is going to go on the rise,
then the cost of borrowing is gonna search, that
means that access to cheap capital is over. And
if you're taking mobility as a broader sector, right
? They don't even make it to our readiness indicator
for even auto comical because if you're looking at right
Helling company, they are really, majority of the
spending is still buying market share. Um, the
core technology is relatively simple compared to Tesla or compared
with china B. Y. D. There in
battery autonomous driving chip set. That is what investors
looking for. They're no longer looking for you to
spend money on marketing expenditure, advertisement, even having
Al Gore's leak app is not enough. You need
to demonstrate to the market, you're investing in deep
engineering so that they are willing to give you money
for those funding. Okay, so another question is
Russia's ongoing invasion of Ukraine. Clearly driving up gas
prices. Car rental companies, different fleets want to
add electric vehicles to their own fleet. And certainly
I know for any Uber or Lyft riders, they've
probably written in an electric vehicle at some point before
if they are active riders. But the fact that
gas prices are rising Howard and this company, both
of these companies, certainly not immune to the geopolitical
factors driving the overall stock market. What could the
impact of a prolonged invasion have on these companies?
What we already see the Uber bill has been going
higher and higher. Right? So, uh,
my school is that Switzerland and I also noticed my
Uber bill has been going higher and I think there's
a massive passing on price transfer to consumer, which
means that when things are on the rising price consumers
going to, you know, scale back in terms
of usages. So that becomes a quite worrisome in
terms of going forward. The revenue guidance. Um
, so that would be the short term effect over
the long run as the passenger car continue to move
to electrified. Perhaps over the long run, the
price comes down better. But the big winner here
will be the E. V. Makers, not
Uber nor left. Alright. Howard, We've got
to leave it there. Always good to get your
take. Great to see you. That's how would
you like a professor of management and Innovation at IMD
Business School?