Hey amplified22, think of it this way: if you wanted to be a taxi, you would need to buy the vehicle, the plate, all the comms gear etc., and then have it one the road as much as you can to get an appropriate return on equity employed. However, if you are an Uber driver, you just use your own car that you have already bought, so that if you are driving home from the CBD you can also take a paying passenger. That is, the revenue is just cream on the cake because you already own the car - i.e. its a marginal cost model and you don't need to earn as much as you have no equity directly employed. Same as AirBnB: you already have your house, so renting out a room is cream on the cake from an idle asset, as compared to buying the house in order to rent out rooms like a hotel.
The net result of all this new-found efficiency is to drive the cost of taxis & hotels down. Like anything, the higher cost providers may very well be put out of business and lower cost providers might survive but will just be forced to earn less.
So while CAB may not be annihilated liked Dymocks, its earnings will be severely reduced and will therefore only ever be worth a fraction of what it is worth today. Prepare for CAB at $1.00.
CAB Price at posting:
$3.47 Sentiment: Sell Disclosure: Not Held
