Pushed by the demands of investors, Uber CEO Travis Kalanick resigned from his post a few weeks ago. While this seems like the main reason for the falling value of his ride-hailing company, it appears that Uber’s stocks has been dropping even since all the controversies began.
In the eyes of investors, the company’s stock price fell in May due to the various scandals and setbacks accumulated in the previous months. In February, a video of Kalanick arguing with a driver about pay circulated online, in which the former Uber CEO later expressed that it was time for him to grow up and get help. It was the latest in a series of challenges for the ride service, after self-driving vehicle unit Waymo sued the company for allegedly stealing designs of their autonomous vehicles as well as the on-going investigation regarding allegations of sexual harassment in their own organization.
While Uber’s stocks are not publicly traded, new securities filings present that at least one of its major investors has marked down the price of its shares in May. Among the over two dozen funds, Principal LargeCap Growth Fund revealed the full portfolio holdings through May showing a reduced value of Uber stocks by nearly 5%. While Principal is a relatively minor shareholder, its valuation was done by T. Rowe Price, a much larger Uber stock owner. This implies that the latter may have made similar markdowns on its much bigger stake.
The new 5% markdown may be small, but it’s noteworthy enough considering that it happened at a time when Uber did not raise any money or have any significant transactions that would boost its official value. Other top Uber shareholders have yet to release any further findings. Until then, it won’t b clear if the perceived drop in Uber’s stock price is widespread across the broader investment community.
The next CEO
Despite the organizational challenges, Uber will continue to move forward along with appointing their next CEO. There are several names mentioned that could spearhead the $70 billion ride-sharing firm, including Facebook’s COO Sheryl Sandberg, former Ford’s CEO Mark Fields, and former Disney COO Tom Staggs.
However, there are many obstacles that the next Uber CEO must fix in order to ensure a smooth transition, such as:
1. They are not Travis Kalanick. The former CEO has ‘fostered a cult of personality’ at the company, leading to over a thousand Uber employees to sign a letter requesting for him to be reinstated.
2. There is a lack of senior leadership. Aside from the CEO, Uber’s SVP of business and Kalanick’s right-hand man Emil Michael left just before the former CEO resigned. There’s also no Chief Operating Officer as Kalanick was in the middle of searching for a new hire before he left. This leaves the company leaderless when it comes to strategy and daily operations.
3. Facing the pending legal battle with Waymo. The new management will have to reevaluate their current legal strategy for the lawsuit.
4. Uber needs to make money over the next five years. The company hopes to lower down the cost by doing away with drivers and replacing them with driverless cars. While it’s a future that could absolutely happen, it’s still a long way from being a reality, which could cause Uber to lose money.
Uber is working on expanding into Sub-Saharan Africa even with internet connectivity issues in the continent. Currently, most African countries have expensive internet with generally slow speed compared to leading nations.
In the United Kingdom, O2 presented a chart showing that sim only deal plans offer 4G speed whether it’s the most affordable plan with 250MB data or the most expensive with 30GB data allocation. Although Kenya has upgraded its internet infrastructure allowing users to enjoy an average speed of 10Mbps, there are still some African nations such as Mali with limited connectivity.
This makes it difficult for Uber to penetrate the African market, adding to the many other hurdles such as high volume of traffic, immolated cars, and local taxi drivers protesting against the app.
“It’s true that the networks out here still have spotty areas and the experience isn’t as smooth as it is in the US or Europe, and that could definitely cause some friction for Uber users (e.g. you’re in a rush and try to request a ride but need to wait 10–20 seconds for the network to pass on your request). But that said, smartphone owners over here have a high tolerance for this kind of interaction; I don’t expect that they’ll be easily deterred by a slightly slow or jerky experience, “ said Galt Elijah MacDermot, Product management for an Android and web products company in Tanzania and Rwanda.
Aside from their African market expansion, Uber is also focusing their attention on their investment projects – self-driving vehicles, flying cars and much, much more.
Exclusively written for Sentifi Insights
About the guest blogger
JB4Tech is a fintech enthusiasts, VR geek, and a young stocks investor. She has attended several SAP TechEd events in Europe and the US, hoping to learn the latest developments technologies for education. With plans to develop her own learning software, she is now taking various online and campus courses in building a virtual reality training software that businesses can use in enhancing the skills of their off-shore employees.
Uber in the financial crowd
Travis Kalanick announced that he stepped down as the company CEO on June 20, 2017. The decision caused a mounting discussion on social media hitting its peak with over 30,000 messages and lasted for several days as recorded by Sentifi engine. For more detailed coverage on the company, become a member, set up your watchlists to get notifications on Uber’s latest stories.