China just legalized ridesharing under a new regulatory framework... coincidence?
Uber to Sell China Business to Rival Didi After Losing Billions
31–40 of 194 posts
Re: Uber to Sell China Business to Rival Didi After Losing Billions
#32Back in 2014, Didi and Kuaidi, the other big ride-hailing service in China, had a price war. This forced 20 smaller ride-hailing companies out of business. In 2015, Didi and Kuaidi merged.[1] They managed to escape antitrust review by claiming their revenue was below the $65 million threshold for antitrust reporting in China. With their price war, they were both losing money, so the deal was not subjected to antitrus…
Not really. Didi doesn't control the taxi industry, and black cabs have always existed inside of the formal taxi business. This doesn't give them a lot of pricing power, they can't jack very high until people start finding alternatives and competition springs up again.
Re: Uber to Sell China Business to Rival Didi After Losing Billions
#33I can't tell if this is a good deal for Uber investors or not. As I understand it, Uber will own a 20% share in the combined company. The combined company is valued at $35 billion, so Uber's share of the value will be $7 billion (actually less, since they also need to share it with Baidu which invested directly into Uber China too). $7 billion doesn't sound too bad as an exit. However, if Uber's China business is wor…
Uber's China business was losing money before (I believe to the tune of about $1bn/year), and it looked like they weren't going to get a permanent hold in that market. Local competition was very strong. Consequently, I would conjecture that China was never a large part of Uber's valuation. Leaving it at slightly more than 10% of their valuation seems reasonably realistic to me. Keep in mind: * The major Chinese citie…
Didi was also losing a lot of money. It was a big cash bonfire race to have the biggest market.
Re: Uber to Sell China Business to Rival Didi After Losing Billions
#34Well played by Didi. This was a years-long chess game with enormous stakes and Didi came out winning. Make no mistake, Uber's goal was absolutely to dominate in China, if they could. That was a big part of their pitch to investors over the past two years. This deal is an admission of defeat and a retreat from competition, salvaging what value they could in the process. I would imagine this speaks to mounting pressure…
this is bad news for Lyft who Didi basically just abandoned after partnering with them and were hoping that Uber would self implode by overspending in China, Uber has got the US market on lock https://techcrunch.com/2016/04/11/lyft-and-didi-kuaidi-launc...
Maybe Lyft already knew this, which is why they have been trying to sell themselves.
Re: Uber to Sell China Business to Rival Didi After Losing Billions
#35Next up, gobbling up Lyft. Looks like they really want to be the monopoly at IPO time. At this rate, they'll probably IPO at more than $100 billion. Sigh, should've interviewed with them last year, haha
It seems like you're reading this as them gobbling up Didi, instead of admitting defeat?
Re: Uber to Sell China Business to Rival Didi After Losing Billions
#36I can't tell if this is a good deal for Uber investors or not. As I understand it, Uber will own a 20% share in the combined company. The combined company is valued at $35 billion, so Uber's share of the value will be $7 billion (actually less, since they also need to share it with Baidu which invested directly into Uber China too). $7 billion doesn't sound too bad as an exit. However, if Uber's China business is wor…
Uber's China business was losing money before (I believe to the tune of about $1bn/year), and it looked like they weren't going to get a permanent hold in that market. Local competition was very strong. Consequently, I would conjecture that China was never a large part of Uber's valuation. Leaving it at slightly more than 10% of their valuation seems reasonably realistic to me. Keep in mind: * The major Chinese citie…
"The major Chinese cities generally have very developed and efficient systems of mass public transit, reducing demand for rideshares (and cars in general)"
This depends on your frame of reference. If you're comparing with SF, sure. If you're comparing with London or New York, less so. In London, the underground is faster than private car for many (most?) daytime journeys. In Beijing and Shanghai, a private car is almost always faster. Subway stations are spaced too far apart, and the walking involved in changing lines is pretty long. Buses are slower than cars even at times when bus lanes are active.
"While China is a large country, not everyone can afford an automobile or a rideshare service."
The people who don't have cars are precisely the people who use rideshare services.
Compared with the West, in China, ridesharing fares are lower, and the cost of owning+operating a car is higher. I ride Uber 10-15 times per week. The total cost of those rides is 20%-30% of what it would cost to lease and operate my own car, even if parking were free (which it's not).
Re: Uber to Sell China Business to Rival Didi After Losing Billions
#37As long as anywhere in the world, I can get out of the airport, open up my Uber App, and summon an Uber - I'm happy.
Re: Uber to Sell China Business to Rival Didi After Losing Billions
#38I can't tell if this is a good deal for Uber investors or not. As I understand it, Uber will own a 20% share in the combined company. The combined company is valued at $35 billion, so Uber's share of the value will be $7 billion (actually less, since they also need to share it with Baidu which invested directly into Uber China too). $7 billion doesn't sound too bad as an exit. However, if Uber's China business is wor…
It's not a $7 billion "exit". It's an investment for a 20% stake in Didi for $7 billion, which presumably will increase in value as Didi continues to expand in China, especially with less need for ridiculous spending on driver incentives since they will no longer be competing with Uber. Uber probably had something in the ballpark of 20% market share in China so it sounds like the two decided to simply make peace and…
Suppose you spent $1B on a factory to make blenders + blender marketing + distribution channels, etc. Later, you invest $200MM in another blender concern for a 20% stake. How do you value / account for the first $1B in sunk costs?
Re: Uber to Sell China Business to Rival Didi After Losing Billions
#39Uber finally threw up the white flag in its fight against Didi in China. I wonder how big of a dent this puts in Uber's sheen of invincibility in other markets. Will investors be braver backing other regional competitors like Ola in India and Lyft in the US?
China is a whole different market. Nothing can be extrapolated from China. Amazon lost in China, but is doing well in India.
Re: Uber to Sell China Business to Rival Didi After Losing Billions
#40"Didi is making a $1 billion investment in Uber at a $68 billion valuation, people familiar with the matter said." So that's where Apple's $1 billion in Didi[1] just went! [1] http://www.reuters.com/article/us-apple-china-idUSKCN0Y404W
Insider trading?