From London To Madrid To Berlin: Europe's Cab Drivers Stage Uber Protest
Perhaps the 'disruptive' taxi company's name refers to its valuation more than its 'worth' as Uber's dramatic expansion plans to take over the world are hitting a rather large snag in Europe. As WSJ reports, taxi drivers planned to turn a handful of European city centers into giant parking lots Wednesday, protesting the mobile car-hailing service. Uber has been subjected to scrutiny elsewhere, including the U.S. and Canada. But the hurdles have been higher in Europe, where taxi drivers tend to be well organized. The industry is often more heavily regulated, and governments are more willing to actively protect sectors under threat of job losses. Across Europe, as the map below shows, Uber is facing a series of legal challenges; which makes, as NYU valuation guru Aswath Damodaran confirms means the $18 billion number "is likely wishful thinking."
The demonstrations highlight some challenges facing Uber and its peers as they race to increase revenue and woo investors.
But the scale of the planned protests across Europe also underscores the extent to which the technology has upended one of the world's most regulated industries.
Uber is facing a series of legal challenges, including a potential decision by a London court about whether the company's app constitutes a cab meter. A U.K. regulator has deemed Uber legal, but the service could be hampered if a court rules otherwise. In Brussels and Berlin, Uber is facing court rulings that have effectively barred the service.
Uber executives have embraced the protests as a chance to show how useful the service is. "If anything, it's going to make Uber even more visible, and make a lot of people realize that they now have choices that they didn't have before," said Pierre-Dimitri Gore-Coty, Uber's general manager of Western and Northern Europe.
And here is Damodaran explaining his $6 billion valuation... (via qz)
Damodaran starts with three key assumptions: That the global taxi market is roughly a $100 billion a year business, that Uber can gain 10% of that market, and that it will be able to continue keeping 20% of customer payments, as it does now (the rest goes to the driver). But he helpfully gives us this matrix to see what would happen if you kept that 20% of gross receipts constant but increased the market size, or Uber’s share of it:
Basically, to get to $17 billion or more (the yellow boxes above), you need to believe either that the market for car services is much bigger than Damodaran’s estimate, or that Uber will be able to capture far more than 10% of it, or a mix of both. These are tricky propositions, especially considering the wealth of competition (both old-school taxis and newer competitors like Lyft). And assuming that Uber can hold on to 20% of gross receipts may be generous, too, since regulation could increase its costs, or competition could oblige it to pay its drivers a bigger cut.
What could go wrong?
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