For about two years now whenever I really want to feel important on my way to an event I open up my smartphone and get my Uber app running. Uper is a mobile app that connects passengers with drivers of vehicles for hire (think Lincoln Towncar) and ridesharing services. For the price of about 25% more than a cab I can arrive in style with a driver that doesn't spend the whole ride listening to drums and whistles, yelling into his hands-free in some language I've never heard of, while the back of my pants are stuck to the upholstery.
As far as service goes, it's great. I can see how far away the car I called for is, the driver that's coming to get me, and what type of ride I'll be in. There's no need to worry about whether or not the card reader is going to work or even carry cash. Payment is made through my Uber app using the credit or debit card of my choice. If you haven't tried it and live in a city like Chicago where it's available, I suggest you give it a shot.
However, the cab company that owns ZERO cabs just raised $1.2 billion from institutional investors, mutual funds, private equity and venture capital. The funding values the company at $18.2 billion. To put that in perspective, Chipotle ( CMG ) has a market cap of $17.7 billion and operates 1,500 restaurants.
Uber has been accused in several jurisdictions of illegal taxicab operation. The list of cities where Uber has run into trouble includes San Francisco, Washington D.C., Chicago, New York City, Toronto, Seattle, and London to name a few. In other words, the legal team has had their hands full over at Uber.
With no brick and mortal locations needed, no investment in taxis or maintenance, and a limited number of employees (70 by some estimates) what is Uber going to do with $1.2 billion? So there's my question that we've been trying to figure out here in the office all day.
What is Uber going to do with $1.2 billion?
My guess is fund the "War chest" so it can survive the legal battles across multiple states and countries. Or maybe they are going to invest in data centers around the globe to house their servers. Another option would be buying out a competitor like Lyft or Sidecar. Uber didn't offer up much of an explanation in the announcement of the deal.
Let me know what you think. What does a cab company with no cabs do with $1.2 billion?
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
