Uber reported some 2018 Q3 quarterly financial numbers on Wednesday.
As similar ride-hailing companies across the globe may go public in the coming 2019-2020, here I compiled some publicly available numbers together.
While Uber’s revenue growth is slowing down, at least it can target a 2019 full year revenue over $15 billion with 25%+ growth rate (an implied valuation multiple of 8x revenue).
Similar for Lyft – at least it needs an annualized revenue of $3 billion (an implied valuation multiple of 10x revenue), which means ~$750 million per quarter. It seems easier to achieve to me in Lyft’s case.
And Didi… its take rate from GMV is said to be much lower than Uber’s (~23%). Assuming a GMV of ¥120 billion in 2019 and a take rate of 10%, Didi will achieve an annual run rate of ~$1,700 million. Then it will be valued at 50x revenue multiple for a $85 billion valuation…
No comments on specific company. But overall, this space seems to have stretched valuation.
However, some other factors need to be counted in, such as low risk of competition (the market structure is mature or foreseeable I would say), the definite future of transportation-as-a-service (with growing market share in overall transportation), upcoming initiatives (e.g. autonomous car services, autonomous on-demand truck, etc.)
It seems that certain future is coming for sure in many investors’ eyes. Or they are just made to believe in it.
Crystal City near Washington was reported a few days ago by Bezos’ Washington Post as the choice for Amazon’s HQ2; only after 2 days, medias reported that it’s going to be split into two cities.
While the result will be announced soon, I think it is worth to review tech firms’ real estate moves by looking at Facebook, Google, etc. This post will focus on Facebook.
Facebook’s original office (since 2004) was in downtown Palo Alto on Emerson Street. It had 5 or 6 offices, one conference room, and a large common area.
Source: Daily Mail, NY Times, Redux, eyevineSource: Business Insider
The following expansion in Palo Alto including leases on S. California Avenue and 1050 Page Mill Road.
Facebook moved to Menlo Park in 2011, the old campus of Sun (acquired by Oracle) – an 11 building, 57 acre, 1 million square foot property on the Bayfront Expressway. The purchase was a sale-leaseback with a 15 year long-term lease, with an option to purchase the campus after five years. There were no tax breaks included in the deal with Menlo Park. Facebook has also bought a 22 acre building connected to the campus by a tunnel. It was rumored that Facebook had been considering a leaseback of the property, with the purchase being assigned to a state pension fund. A 15 year leaseback was confirmed today, with the option to buy after 5 years. [TechCrunch]
Source: e-Discovery Team
Besides the move in Silicon Valley, in December 2010, it leased two floors with up to 150,000 square feet at 335 Madison Avenue in New York City, accommodating up to 600 people. It began construction on a $450 million data center in Forest City, North Carolina in 2010 after the first one announced earlier that year in Prineville, Oregon. Facebook also announced a 500-person office in Hyderabad, India, as the first office in mainland Asia, investing up to $150 million to the 50,000 square foot facility.
The number of employees start to explode since 2010.
In a 2013 report, FB has the project, called Anton Menlo, cost an estimated $120 million. It will sprawl over 10 acres of land off Highway 101 in Menlo Park, California. The 630,000 square-foot Facebook town will be walking and biking distance to Facebook’s headquarters. There will be 35 studios, 208 one-bedroom apartments, 139 two-bedroom apartments, and for top Facebook employees, there will be 12 three-bedroom apartments. [Business Insider]
Source: Business InsiderSource: Business Insider
In 2015, FB acquired a 56-acre industrial park immediately south of its current Menlo Park headquarters. The purchase of Prologis Inc.’s 21-building Menlo Science & Technology Park — which industry sources pegged at roughly $400 million. [Silicon Valley Business Journal]
In 2016, Facebook goes from rent to own in Menlo Park in $202 million deal.
Source: Silicon Valley Business Journal
During 2017-2018, FB has opened offices and hired at a blistering pace, with enormous new leases in Sunnyvale, Mountain View and Fremont. This month, Facebook leased all the office space in San Francisco’s new 43-story Park Tower, vaulting it into the ranks of the largest tech tenants in San Francisco. Instagram, a major Facebook subsidiary, recently moved 200 employees into another San Francisco office tower. [San Francisco Chronicle]
In June 2018 reports, Facebook has leased an additional 754,000 square feet for offices in Fremont.
In 2017, FB said it will two more Prineville data centers, followed up by a report of $750 million in Sep. 2018, bringing total investments to $2 billion and total footprint to 3.2 million sqft. The expansion will take nearly two years and employ 1,500 construction workers at peak.
Facebook Data Center in Prineville, August 14, 2015 | Source: Thomas Boyd, oregonlive.com
Lobster industry was a nautical gold rush. Two generations ago, the entire New England coast had a thriving lobster industry.
Today, lobster catches have collapsed in southern New England, and the only state with a significant harvest is north in Maine, where the seafood practically synonymous with the state has exploded.
Now lobsters keep running to the north and going deeper in the water. Maine might be in trouble after another 5-15 years.
Rising temperatures along the bottom of the Atlantic Ocean will force American lobsters (H. americanus) farther offshore and into more northern waters, a new study finds. Credit: Natalie Renier, Woods Hole Oceanographic Institution
That’s happening not only to lobster, but literally to all marine species.
In the U.S. North Atlantic, fisheries data show that at least 85 percent of the nearly 70 federally tracked species have shifted north or deeper, or both, in recent years when compared to the norm over the past half-century. And the most dramatic of species shifts have occurred in the last 10 or 15 years.
Summer flounder’s center of species | Source: NOOA/Oceanadapt, Rugster U., Reuters
Similar findings in a map of predicted migration – marine species are moving northward to colder waters.
Starbucks posted a stellar earnings result today, with net revenue at record level of $6.3bn, beating expectations in many aspects.
Starbucks up after hours with earnings beats | Source: CNBC
While a single beat doesn’t indicate a new stage of growth, in the long run there are three issues I think matter the most and should be watched closely.
1 | Problem: Frappuccino’s decline
It was an problem Starbucks facing over the years. People are leaning towards healthier products (at least a very obvious trend in Cali), which usually means less sugar and less calories. That’s a problem for Starbucks’ Frappuccino, as explicitly mentioned in CEO’s presentation in June.
How did/will Starbucks address this? Product Mix & Innovation
Strategy a) Big push for healthier product lines – Nitro Cold Brew & Refresher series etc.
Starbucks Nitro Cold Brew | Source: Starbucks
– Nitro Cold Brew “is expected to be available in nearly 1,500 stores in 26 markets by the end of 2017″ (SBUX Jul. 2017 Press Release) -> “[Starbucks is] accelerating this platform to more than 2,800 stores by the close of fiscal year 2018, up to more than 6,000 stores by year-end fiscal year 2019″ (SBUX Q3 Earnings Call Transcript). A 4x availability expansion for cold brew in 3 years.
– Several new products in the Refresher category were introduced, e.g. “Dragonfruit” introduced Jun. 2018, “Pink Drink” introduced last year, etc.
Dragon Fruit | Source: StarbucksPink Drink | Source: Starbucks
Strategy b) Instagramable & limited edition within the Frappuccino category
– Unicorn Frappuccino (Apr. 19-23, 2017), Zombie Frappuccino (Oct. 26-31, 2017), Christmas Tree Frappuccino (Dec. 7 – 11, 2017), Crystal Ball Frappuccino (Mar. 22-26, 2018), Witch’s Brew Frappuccino (starting Oct. 25 for a limited time while supplies last)… among many others.
– Plus, Starbucks’ new Frappucino recipe has fewer calories and less sugar, part of its efforts to reduce sugar by 25% by 2020.
Starbucks Rewards could serve a similar role as Amazon Prime. In past last 3 month, loyalty program accounts for 14% of all transactions and US loyalty members contributed 40% of US sales. That’s what happened in the Amazon case, where its Prime members out-spend non-members significantly.
Digital relationship makes it easier to incentivize purchases, market new products/initiatives, bring in more collaborations (e.g. Spotify, Pokémon GO), expand membership offerings and more.
Starbuck’s push for afternoon consumptions is also facilitated by the digitalized promotions.
The room to grow digital relationships is still large – currently 15.3 million global active members, only representing ~22% of its 70 million global customers base. “Additionally, drive-thru, out-the-window and Mobile Order and Pay combined grew to more than 50% of the way customers are ordering, up more than 10 percentage points in just two years” according to COO.
3 | Opportunity – China Growth
It’s more debatable on Starbucks’ China future. Just want to highlight a few sure things.
Starbucks took full ownership in China East & opened flagship Roastery in Shanghai in 2017 – definitely the right moves here.
China’s coffee consumption will explode, even considering major cities alone. Younger generations will consume more coffee and they will represent an increasing proportion of the overall urban population.
China coffee consumption potential | Source: Starbucks 6/19 Presentation
Coffee even has a role to play in China’s GDP growth by boosting workers’ average productivity and the “culture” of working overtime.
Herding effect is stronger in China and “Instagramable & Limited” strategy may provide better outcomes if properly implemented.
Other things worth noticing – Starbucks’ food, packaged goods with Nestlé, next-generation store design, coffee supplies, SKU outside the Starbucks’ core products, etc…
提案方包括 Trillium Asset Management (53,000 shares)，以及纽约市 Comptroller 和三个州的 State Treasurer – Illinois (190,712 shares) , Rhode Island (168,230 shares) and Pennsylvania (38,737 shares), New York City Pension Funds (4.5 million shares)，大约近 500 万股（占 0.2%）。
