After the CEO change, the company changed strategy and, as evident from the results, it went in her favor. Because of the large loss Uber declined from the presence in some regions of the world, including in Russia and China. Instead, the company acquires the share in local services, online taxi booking, to maintain access to relevant markets. Transactions under this scheme was conducted with Yandex and Didi.
Startup at the time was developing a system for self-driving cars, however, work in this direction had to be suspended after self-driving Uber car hit a man to death, despite the fact that was equipped with a lidar. The inability of the system of self-government recognize the man in the dark threatens further activities of the company in this market.
After that Uber has engaged in business diversification. As a result, the service taxi was added to the platform to order food delivery UberEats. This business proved to be more effective than the primary, so it will come out in profit. Currently, the company is considering launching UberWork platform for fast recruitment. The refusal to focus on one segment increases the potential for the development of business and, as a consequence, increases the value of the company. With high probability IPO Uber successful company will be priced above $100 billion, but the profitability of placing a big question because of its size.
If strong competitors
The cost of a competitor of Uber, Lyft company, according to the latest valuationobtained in 2018, was $15 billion, however the company did not capitalized on the problems of their competitor. Lyft chose a more stable path of development, focusing on the US market and exit in profit. Due to the sustainability of its business model and a positive image of Lyft has a good chance to gain a foothold in the market.
If the company aspires to improve the assessment of its value, it will have to expand through the introduction of such services as delivery of food, finding employees, etc. international expansion — not the best choice for Lyft, as the market has already been formed and saturated. But on the local us market it can successfully fight for share in other types of service due to a positive perception of their brand.
Lyft from this point of view is very similar to “Yandex.Taxi”, which is also successfully expanding share in its home market and has a more positive image than the closest competitors. In this regard, the taxi-service from the “Yandex” is evaluated by the same metrics, and Lyft. However, the Russian company has several major benefits, including full development of several services similar to Uber offers, which will help to increase the capitalization of the group significantly.
First, “Yandex” has won in the competition with Uber in the Russian market. The result was a joint venture, in which “Yandex” has received 59.3% of when you invest $100 million, and Uber — 36,6%, while the investment of $225 million, This means that the American company left the market losers.
Secondly, the Russian company created the service “Yandex.Food.” Now there are persistent rumors about plans to bring “Yandex.Taxi” for an IPO. It is likely that SP on the stock exchange will be withdrawn and the service delivery of food. Over the past 12 months, the company earned 10.5 billion rubles. By the end of 2018, revenues may exceed 17 billion rubles, or $258 million in the coming 12 months the growth rate will remain at the level of 35-45%, the assessment of business of “Yandex.Taxi” may reach $5 billion at a cost of “Yandex” in the $10 billion.
Today “Yandex” owns $3 billion in a JV with Uber, consequently, the Russian technology company is undervalued, even taking into account the domestic realities. In the case of an IPO of the service “Yandex” it is possible to expect the return for the period locap in the amount of 50-55% is true, without consideration of tough new sanctions of the West against Russia.
Thirdly, the parent company of taxi service and food delivery is the largest Internet search engine in Russia, which also belongs to the virtual payment system “Yandex.Cash”, “Yandex.Music” and many other business segments. Each of them has huge prospects of development, whereby the value of the company can increase several times.
Sberbank plans to buy 30% of “Yandex” are unlikely to be implemented, however, the drop in shares of Internet companies after the publication of the news about it gives investors a good opportunity to earn. The main driver of growth of quotations of “Yandex” will be strong financial results for the third quarter, published October 29. In my opinion, taxi service and food delivery will form the main volume of revenue in the subsidiary business of “Yandex” in the next three years. The main reason is the generated market order a taxi online, which will remain three or four major players.
For three years this market will grow by more than 5% as it already entered the stage of maturity. The development of platforms “Yandex.Taxi”, “Yandex.Food”, Uber and UberEats as parts of one SP may be one of histories most successful spin-off in Russia. This company is able to attract quite a lot of money from Western investors, if Sberbank refuses to buy 30% of “Yandex”.
Uber, Lyft, Yandex and other industry representatives provide an opportunity for earnings in a booming market ridesharing and other online platforms. Uber high score suggests that the segment in which the company operates, is very popular and has great potential. Thus for today only, Uber is going to IPO, Lyft raised funding and is not yet ready to debut on the open market, and Yandex is trading at a large discount.
Investors prefer to buy assets abroad as looking for stability and legal protection for investments, however, Russian stocks have great growth potential. Investments in “Yandex” can provide the income about 30% due to the release of Uber in the public market — indeed, in this situation, and the reassessment of business “Yandex.Taxi”.