Uberwants to be a tech company that Warren Buffett could invest in. Berkshire Hathaway’s portfolio encompasses railroads and airlines — it is not a big leap to urban transport. As Uber approaches critical mass, it aspires to a similar investment thesis: dominance of regional markets; prices that rise with inflation; revenues linked to population growth; personal mobility in ubiquitous demand.
Railroads and airlines make money; Uber does not, yet, even after jettisoning its lossmaking Chinese business. In the third quarter the company lost more than $800m on revenues of $1.7bn, according to figures first published on Tuesday by The Information website.
This would matter more if Uber also thought of itself as a transportation company. But the goal is to be more like theNew York Stock Exchange than the BNSF Railway: a dominant marketplace matching human capital (drivers) and physical assets (cars) with those willing to pay for using them. The distinction matters in light of a case before the European Court of Justice, due to decide on Uber’s regulatory framework. And it also explains why investors tolerate the cash burn, because exchanges reap a disproportionate share of the rewards a market can offer.