Is the ride-hailing business sustainable?

  • Date: 08/28/2021

Clearly, the business model of these ride-hailing companies is not sustainable, let alone profitable. While the growth stories can continue to sustain market valuation, it will come a time when investors finally realise that the business model adopted by these ride-hailing companies is simply not feasible in the long run. After all, business is about making money and not merely expanding and penetrating new markets to generate sales.

For private equity investors in these ride-hailing companies, the name of the game is to exit at the right time at a higher valuation as the investee company expands. Typically, these investors will likely still participate when the investee company is at the growth stage as it increases the value of their original investment, but when it comes to the stage where growth is a plateau or at the time of IPO, these private equity funds will be looking to exit for good.

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