Ride hailing apps are in an overhaul season.
On September 26, two days after Lyft announced significant updates to its app, Uber held a press conference in San Francisco and presented a slew of updates under CEO Dara Khosrowshahi’s slogan, “We want Uber to be the operating system for your daily life.”
Like Lyft’s update, which now presents car-sharing as just one of its transit options among electric scooters, bikes and public transit, Uber is also decentralizing car-sharing in an effort to defy categories and shift user perception.
Uber isn’t just a ride-hailing service anymore. It provides food delivery, electric bikes and transit passes, so naturally the app should reflect its diverse offerings.
Uber also announced the addition of a four-digit PIN verification system so that riders always enter the right car. This comes four months after Samantha Josephson, a college student at the University of South Carolina, was murdered after entering the wrong car. Other safety features include updated facial recognition technology, in-trip texting to 911 and in-trip incident reporting.
But since Uber went public in 2019, it has laid off more than 800 employees. Its stock price has fallen significantly by 33% (see chart below), which leads some analysts to think these overhaul efforts are futile and distracting.
“It’s lipstick on several pigs at once,” said David Kirsch, a University of Maryland business professor. “I’m trying to figure out what magic do they think they’re invoking by putting these things into a single app.”
Other investors have their profit hopes on UberEats, since 13% of Uber’s revenue in 2018 came from the food-delivery segment, after only generating 3% of revenue in 2016. UberEats revenues alone were $1.5 billion, showing 148% growth in 2018. Uber’s ride-sharing revenues only grew 33% in 2018.
Bank of America champions Uber stock due to the unexplored market growth for Uber Comfort, Business, and Eats segments, but caution still reigns when Uber’s second quarter earnings report revealed revenue growth of 14% – the fourth quarter in a row to show slow growth. On top of slow growth, Uber spends $1 billion per quarter. While it has about $15 billion in cash, this tense scenario has investors looking at their watches.
In the meantime, Uber’s new app interface forces users to make an initial decision between ride-hailing and food delivery. The updated app will be tested in nine countries, including the U.S., starting this month.