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- 2 June 2011
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I fear the UBER shadow most. CAB looks due for a swing up in this long persistent down trend.Is anyone else in this stock? At $2.85, it is starting to look attractive even after factoring in a full year of the cap on credit card surcharges.
I fear the UBER shadow most. CAB looks due for a swing up in this long persistent down trend.
I personally think that the Uber threat is way overblown.
I agree with the gist of your post, Uber arent even really a "disrutper", they are hugely unprofitable company, who treat their 'employees' like slave labour. Uber are back already looking to investors for more billions to keep the company afloat.
Taxis will be round for a long time yet and there is still plenty of money to be made by the CABs of the world.
I am not convinced the ride sharing business is viable in the long term, it may well go the way of a lot of other tech companies, the recent Damodaran article that was linked was an interesting insight.
I am not sure what the real value of CAB is going to end up, probably need to see all states & territories cut the CC fee to 5% and then see what the bottom line looks like, so far the impact has been much less than the drop in share price would suggest and they may well prove to be very cheap.
I still hold and happy to collect the healthy yield everytime the divvy bus drives past! Its still 7% based on my purchase price.
... I am not sure what the real value of CAB is going to end up, probably need to see all states & territories cut the CC fee to 5% and then see what the bottom line looks like, so far the impact has been much less than the drop in share price would suggest and they may well prove to be very cheap.
In fact, the more I learn about the economics of ride-sharing service companies, the more I am beginning to suspect that they will never be the super-profitable, capital-light, high-return-on-capital businesses that people forecast them to be. Rather, their economics are more likely to resemble the economics of airlines than the economics of REA or of Microsoft.
craft said:Return on those dam buses is why I'm no longer interested in CAB. The ride share threat the credit card caps - all known and probably even priced in IF they milked the declining business and returned the cash to shareholders, but not if they keep investing in low return buses to try and diversify
I give the bus thing 12 months, as in they will get rid of it. It starts to get interesting under a scenario of them selling their bus investment. Public transport companies seem to trade on abot 15-23x earnings. Comfortdelgro is on 22x itself. At that price, CAB's share in the JV is worth pretty much the entire value of CAB, leaving the payment and taxi service biz for free.
Impairment considerations in the annual report for CDC is based on nil growth for the next five years and a terminal growth rate of 2.5%. They dropped their discount from 8.9% to 8.4% and by my math if they hadn't done that they would have had to take a right down on the balance sheet value. 22x Is not something I would ever dream of paying for those sorts of numbers - but who knows maybe I'm missing something. If they did flog it off for 22x and return the cash to shareholders it would make a decent asset play with the upside of the ongoing business not turning out as bad as the popular Armageddon scenario. Still whilst interesting its not my sort of thing anymore, getting fussy/lazy in my old age.
That may be true, although not my own personal view, but that hardly bodes well for CAB's payment system.
If you think that Uber and the other ride-sharing service companies are seriously going to shrink the market for CAB's payment system, don't you first need to satisfy yourself that Uber and these other ride-sharing service companies have a profitable business model? .
At some point - maybe that point is after the incumbents are displaced.At some point, the investors that are funding these massive money-losers are going to demand to see a return. I have not seen any evidence yet that ride-sharing service companies are capable of making any return, let alone a cost-of-capital return, on investors' funds.
No! somebody that believes its a land grab in a new paradigm can be much more damaging to an incumbent then somebody interested in an immediate profitable business model.
Land grab: pretty analogy. Now care to back that up with any real world examples?
Amazon.
Amazon? Amazon is profitable.
Err yeah. It's a 21 year old company. It took 10 years for it to turn a profit while it ate away at the incumbents' businesses.
By "incumbents' business", you mean bookstores?
One of the reasons why the Amazon/Uber analogy is not very compelling is that all Amazon had to do was to steal bookstore customers away from bookstores whereas Uber and the other ride-sharing service companies are going to have steal passengers way from taxis as well was taxi drivers. There are many reasons why the latter in particular is going to be a herculean task - practically and legally - and one that is always going to be shifting one way, then another.
I predict that the bargaining power in that equation will lie with the taxi drivers, not with the ride-sharing service companies.
The similarities of the Amazon analogy is that there is plenty of financial backing for the revenue build of the new model without the need for near term profit.
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