Investors fuel a multibillion-dollar ride-sharing frenzy
Investors including Japan's SoftBank and Google-parent Alphabet are fueling a drive to a ride-sharing future, betting on startups such as industry giants Uber and Lyft which have so far failed to deliver profits.
The frenzied pace of investment suggests optimism over a new model that has disrupted local taxi and transport operations around the globe.
A recent Goldman Sachs study projected that the worldwide ride-sharing market could grow eight-fold by the year 2030, reaching $285 billion annually.
Lyft, which is Uber's main rival in the United States, raised a billion dollars in a recent investment round led by an investment arm of Alphabet. That means the Google parent now has investments in both Uber and Lyft.
Meanwhile Uber's board of directors has approved a plan that opens the door to a colossal investment by Japanese telecommunications giant SoftBank.
Another major player in the sector, Didi Chuxing in China, bought Uber's operations in that country last year and has invested in Lyft and India's Ola as well.
Didi has become Asia's most valuable startup, worth some $50 billion based on a recent funding round.
Uber's new chief executive has vowed to take the company, valued privately at nearly $70 billion, public with a stock market debut by the year 2019. Lyft, with a valuation near $11 billion, is reported to be mulling a strategy to also go public.
Despite the staggering private valuations, smartphone-summoned ride services have yet to prove they can turn profits, and have repeatedly run into roadblocks from regulators and traditional taxi operators in several countries.
Aside from clashes with entrenched industry powers, proudly disruptive Uber has earned a sulfurous reputation with a litany of scandals, lawsuits and investigations.
Uber lost about $600 million in the second quarter of this year, after losing $2.8 billion in all of 2016. Ridership nevertheless is soaring. Such red ink on balance sheets has not deterred investors with the resources of Alphabet or SoftBank, with amounts they have sunk into ride-sharing startups considered "pretty modest," Jack Gold of J.Gold Associates told AFP.
Gold said that high-powered investors may be less interested in quick returns from the day-to-day business of on-demand rides, and keener on getting their hands on data gathered by the operations.
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