At the start of the month, Uber (NYSE:UBER) launched a new feature in some cities at the start of the month: Explore. The new tab in the app allows users to find places to eat and things to do in their city. Not only that, you can make a reservation or buy tickets right in the app using your Uber wallet.
The new product is designed to give people a reason to use an Uber, but it also shows the potential for the ride-sharing company to expand well beyond its current domain in rides and delivery.
Exploring Uber Explore
Uber Explore is a new tab that will recommend places for users to go out to eat or to go to a show or event. It uses information about where an individual likes to go out to eat (using Uber) and makes suggestions for things to try.
It’s a clever redesign for Uber. Instead of figuring out something to do with your partner or friends on Friday and then opening the Uber app, it makes the Uber app the discovery tool. It makes choosing Uber to get from point A to point B easier.
In some cases, it can even give you a reason to use Uber. For example, it’s promoting the new tab with “Uber Explore Offers.” You can get up to 15% off your ride for booking it through the Explore tab.
For now, Uber Explore is focused on getting more people to use Uber for its original use: getting a ride from one place to another. The ride-sharing business took a major hit during the pandemic. Revenue in its Mobility segment was still down 35% in 2021 vs. 2019. However, the company is showing progress in recovering. Fourth-quarter gross bookings for the Mobility segment totaled 84% of the same period in 2019.
Increasing rides can set Uber on the path toward increasing total bookings to between $165 billion and $175 billion by 2024, the long-term outlook provided at its analyst day last month. Bookings totaled $90 billion in 2021, bolstered by its delivery business.
The potential expansion of Uber
As Uber builds out the functionality of its app with ideas like Explore, it’s showing the potential to become a “super app.” That’s a single app with a multitude of functions. The concept is common in China, with Tencent‘s Weixin (WeChat) held up as a prime example. American companies have been looking to emulate the success of the Chinese social app for years with limited success.
If you can book restaurant reservations and pay for concert tickets on Uber, it’s not much of a stretch to see booking plane tickets or doctor’s appointments on the app as well (both of which are tied to instances when people might use Uber’s core business).
In effect, the company’s setting up a framework for people to use Uber for more than just hailing a taxi or ordering takeout. The potential payoff could be huge, and the downside of a failed experiment is minimal. Good growth stocks will make those types of bets repeatedly until one eventually pays off to become a significant catalyst for revenue and earnings growth.
If Uber sees traction with Explore, don’t be surprised if it starts to pour a lot of money into partnerships and promotions around the feature, just as it did with Eats. That would mean taking losses for years to scale a business with the potential for significantly higher profit margins than Uber’s mobility or delivery businesses. But the move could pay off massively in the long run.