Uber is expected to go public this Thursday in the largest IPO this year.
The company listed in its S-1 filing that it depends on nearly a quarter of its revenue from just five cities.
In 2018, Uber said it earned 24% of total Ridesharing Gross Bookings from these five metropolitan areas – Los Angeles, New York City, and the San Francisco Bay Area in the United States; London in the United Kingdom; and São Paulo in Brazil.
Uber said it faces greater competition in large metropolitan areas than in other markets, which has forced the company to offer significant Driver incentives and consumer discounts and promotions in these large metropolitan areas.
As a result of this urban concentration, Uber warned its business and financial results are susceptible to economic, social, weather, and regulatory conditions or other circumstances in each of these large metropolitan areas. An economic downturn, increased competition, or regulatory obstacles in any of these key metropolitan areas could hurt its business drastically compared to other areas. In addition, any changes to local laws or regulations within these key metropolitan areas that affect our ability to operate or increase our operating expenses in these markets would have an adverse effect on our business.
For example, in August 2018, New York City approved regulations for the local for-hire market (which includes our Ridesharing products), including a cap on the number of new for-hire vehicle licenses for ridesharing services. In addition, in December 2018, New York City approved per-mile and per-minute rates for drivers, designed to target minimum hourly earnings for drivers providing for-hire services in New York City and surrounding areas. These minimum rates took effect in February 2019. New York is Uber’s largest market.
In San Francisco, members of the Board of Supervisors of San Francisco recently proposed imposing a surcharge on ridesharing trips in the city, and a ballot measure to enact this surcharge may be introduced in 2019.
Uber also stated in its S-1 filing that 15% if its ridesharing gross bookings came from rides to and from airports. In some cases, Uber is required to pay a fee to airports for pickup and dropoff of passengers. Regulations at airports on Uber and ridesharing services could also hurt its business.