Because Yahoo faded into irrelevancy. If you want Uber to rise in value for a short time, Khosrowshahi seems like an excellent bet. I wonder who Uber will cede their throne to? Lyft?
You could argue that the damage was done, that Kalanick screwed up the company so badly that nothing could save it at this point, so you may as well try to cannibalize it for value. But the best investors know better.
Let it sink in: they're going to run out of money. What then?
If you look at the numbers I have to say that's a little bit silly to say. They have $6.6 bill cash on hand, they are burning ~$2.5 bill per year, although quarter to quarter net loss fell 9% last quarter. They very likely have 2 years, likely more, to start making profits each quarter.
If they really need to jettison more expensive parts of the business they can sell off their autonomous unit and their VTOL investments, along with a ton of other fat they can trim.
Your viewpoint does not seem connected with reality IMHO.
It seems so insane to me that we have a company that is spending billions of dollars per year to break the law all over the world by undercutting while making a loss to corner markets, that is breaking labour laws all over the world, is a horribly toxic place to work, and this is just... okay and fine?
Why is this a thing? Imagine all the useful things those billions could do. Feeding and housing all the homeless people in the USA, for example.
That's Kalanick's genius: people HATE taxi drivers so much, they'll be ok with almost anything to avoid dealing with them. This is the real business opportunity he saw.
I got one the other day. £7, I was happy, the driver presumably was happy. Pre Uber I would have got the bus. There's a lot of value created for ordinary people on limited budgets.
We'll find out. That's two years to turn a 2.5B burn rate into profits. I wonder what Dara will do?
Users won't like the changes. And Lyft is waiting with open arms and promo deals. That 6.6B cash is only impressive because of their user base and fleet.
Drivers might be the first to suffer. They'll probably feel the effects -- less pay -- before the users see price increases. So if Uber is about to switch to moneymaking mode, their fleet may become unreliable soon.
I think uber has the exact model they're trying to execute in mind. They'll turn their existing funds into growth and turn cash flow positive at around their last $100m left in the bank. That way, they most effectively utilise the resources they have and grow as big as they possibly can get. The fact that they are firmly closing the losses gap with constant rate of improvement kinda proves that fact. They definitely won't switch to new pricing model overnight to turn profit, the process has to be gradual anyway. Of course, market forces could be more sophisticated than a simple mathematical model of funds vs returns, and there could be unseen side effects if stopping half way or closing the gap way to quick, but it's probably an assessed risk.
Uber's model of survival isn't exactly self-driving ambitions, it's more about utilising their asset sheet effectively. That's why benchmark could be so eager to get a CFO - someone needs to vouch and stand behind the path to Uber's profitability. Right now, the only person who's left who can stand behind it is Travis, and he lost a lot of cred. Recent rumours about softbank investment might suggest that Travis thinks that this model can be extended even further at the cost of the dilution, and even greater market scale could be achieved (along with his own personal desire to lead on with that deal, possibly), but investors would rather not play another round of uncertainty and ambitious spending and would rather cash out quick. Also after an IPO the company would have a much better chance at leveraging a simple loan/bond to continue growth, as because the rate of its growth would still most likely exceed the interest rates.
The big question is whose investors are willing to go for the big prize.
If both companies push for profitability, then the market slows to the pace they both push it while remaining profitable.
If however only one company pushes for profitability now and the other has investors willing to fund growth for the foreseeable future we could see one emerging as a winner.
Personally, barring an economic downturn on the horizon, it's foolish to go public now if their competition doesn't also go public.
Because there is still plenty of growth opportunities across their various products globally, they can get at least 1-2 more private funding rounds before they truly need to turn to public markets for funding. They should take that money while it's still there.
You could argue that the damage was done, that Kalanick screwed up the company so badly that nothing could save it at this point, so you may as well try to cannibalize it for value. But the best investors know better.
Let it sink in: they're going to run out of money. What then?