Now that Uber and Lyft are public, their inevitable financial collapse is much clearer

Veteran transportation economics Hubert Horan has consistently published the best-informed, deepest critiques of Uber and Lyft, explaining how the companies can never, ever be profitable, and warning investors away from becoming the "greater fools" that allow Uber/Lyft's early investors to cash out at their expenses, while cataloging the many ways that Uber and Lyft's legislative strategy, coupled with predatory pricing, is destroying the cities they operate in.

Now, three weeks after Uber's disastrous IPO, which has left more than 80% of the $25.9B pumped in by Uber's pre-IPO investors underwater (over a period when the S&P 500 rose by 50%!), Horan is back with a sobering reckoning for the sector's future profits.

As Horan writes, there's no way that Uber and Lyft "can produce their service at costs consumers are willing to pay" and there's "no evidence that they can ever profitably expand to any other markets (food delivery, driverless cars, etc.)." Uber and Lyft are losing money faster than any Silicon Valley startup in history, and they have "none of the economic characteristics that allowed companies like Amazon or Facebook to quickly grow into profitability and drive strong public equity appreciation."

But that's not to say that the company failed its (early) investors. The company currently has a market cap of $80B, "corporate value [created] out of thin air," and Horan's educated guess is that the investors in Uber forced founder Travis Kalanick out not over sexual assault scandals, but because Kalanick wanted to remain a private company for as long as possible, keeping the company's finances shrouded in mystery so that critics couldn't see what was really going on behind the closed doors. Read the rest