The company has to keep prices low enough to draw riders, while paying drivers enough to keep them working for the company.
Uber debuted below IPO price of $45 on Friday morning, and while the overall state of the stock market bears some of the blame, it's also clear from Uber's S-1 filing that the company's core business is slowing down.
Combined, these businesses are showing user growth, but declining profitability. This points to a fundamental challenge with Uber's business model: It has not figured out how to do this profitability, and in fact has lost billions in recent years as it's expanded. Managing this two-sided market is particularly hard because Uber faces domestic competition from Lyft, which has suffered similarly large losses.
Overall trips — defined as car rides, Uber Eats deliveries, and bike trips via Jump — is also up and to the right:The trouble begins with the next chart. This is adjusted net revenue, which is the actual amount money Uber takes home from customers after paying out driver incentives and restaurants. But more to the point: Uber faces brutal competition from Lyft in the U.S. and other companies abroad, and this is directly affecting its take rate, which it defines as gross bookings divided by adjusted net revenue."Competitive pressure on our Ridesharing Take Rate has caused it to decline in recent periods.
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