Uber has just taken a revolutionary and potentially dangerous step. It has transformed the way it charges riders, and in doing so has disconnected what it charges from what drivers are paid, as well as from the usual way that pricing is done in the taxi business. Rather than charging by time, distance, and demand, it is now using AI to charge people whatever it thinks they will pay. For instance, if a rider asks for a ride from a wealthy neighborhood to another wealthy enclave, it will charge then more than another rider who is taking a more blue-collar trip of the same distance and traffic level. In doing so, it is also disconnecting what it pays drivers from what it is actually taking in as revenue.
FINSUM: This is a big step for Uber and we are not sure it will be a successful one. The company says it wants to be profitable, but this could just lead to more rider and driver outrage.
Every investor knows that Amazon has been a dynamite bet over the last two decades. The company just celebrated its 20-year anniversary as a public company, and this article shows the scale of returns an investor would have made if they had invested and held on from the beginning. If you had bought $100 worth of stock at Amazon’s IPO, it would be about $64,000 today. The stock had huge ups and downs, including during the Dotcom bubble, and has seen several splits, but altogether its returns have been enormous. In spite of the massive gains, analysts are still bullish, with Goldman Sachs seeing over 30% upside for the stock.
FINSUM: The buy and hold strategy could find no better example than Amazon (maybe Apple?) and the company’s returns highlight the wisdom of the approach.
Source: Financial Times
Tesla investors should be worried. While there has been a lot of fears over the company’s rich valuation, many have stuck to the stock in the hopes of the Model 3 being a big hit. One of the stock’s biggest advocates has been Morgan Stanley’s Adam Jonas. However, he has just reversed his tone and thinks Tesla will continue to be in a weak position, with operating losses continuing through next year. “We expect much larger and more well capitalized competitors to unveil strategies that directly address sustainable transport and mobility”, says Jonas.
FINSUM: Other big car companies and even Apple loom on the horizon as competition for Tesla, so the future is looking less bright.