NEW YORK  - Uber Technologies could be betting on two wheels, not four. The ride-hailing giant may want to buy into – or all of – an electric-scooter mover like Bird or Lime, according to the Information. That could help address a big Uber problem as it readies an initial public offering.

The IPO, on track to take place in 2019 according to Chief Executive Dara Khosrowshahi, could aim for a valuation of up to $120 billion, the Wall Street Journal reported in October. That’s a big step up from earlier private funding rounds. Even though it has a war chest stocked by Masayoshi Son’s SoftBank and others, however, Uber has a big problem: It has yet to show it can make money.

Uber’s gross bookings for ride-hailing and delivery services were $12.7 billion in the third quarter, up 41 percent from a year earlier, but the company still lost over $1 billion. Though it’s investing in rolling out services including its own e-bike and scooter brand, Jump, that’s a hefty shortfall after deals in China and elsewhere that cut the company’s losses in tough markets.

Bird and Lime, the two leading e-scooter brands, have each raised $400 million or more this year, according to Crunchbase, and aspire to multibillion-dollar valuations. A lot of ride-hailing journeys are over short distances of a mile or two, ideal for scooters in urban areas. And although gross revenue per ride is lower – under $4 for two-wheelers on average, according to news reports – companies don’t have to give most of it away to drivers.

They do have to buy scooters. Then there are the costs and logistics of charging, typically farmed out to scooter-community members, and challenges getting access to cities worried about hardware littering their streets, safety and other issues. And competition, at least for now, is intense. Making money is still far from a slam dunk.

But as scooter acquisition costs go down and battery technology improves, that may change. And it’s less problematic than Uber’s four-wheeled business model, which arguably won’t turn a profit until vehicles don’t need drivers at all.

With scooters, Uber could end up cannibalizing its four-wheeled business over short distances. But if that means it can move toward making money, that would be a feature, not a bug.

CONTEXT NEWS

- Uber Technologies has held talks recently with electric-scooter rental startup Bird to acquire the company in what could be a multibillion-dollar deal, the Information reported on Nov. 30, citing several people briefed on the discussions. Uber has also recently held acquisition talks with rival scooter company Lime, the Information said, citing one of the people.

- Both Bird and Lime have raised $400 million or more in funding rounds this year, according to Crunchbase.

(Editing by Tom Buerkle and Martin Langfield)

© Reuters News 2018