The most built-up public offering of the app economy has arrived. This morning, Uber went public at $42 per share. The opening trade was down from the $45 price it set last

Uber’s success as a public company, as well as that of U.S. rival Lyft–which went public six weeks ago–depends on its ability to steal away market share from public transport and personal car ownership. “It underlines what is going to be the critical challenge for Uber . . . which is trading off short-term earnings on long-term growth,” says Arun Sundararajan, a professor at New York University’s Stern School of Business and the author of The Sharing Economy. He estimates Uber and Lyft currently capture an estimated 1% of consumer spending on transportation.

Indeed, there is already some evidence that ride-hail platforms are eating into public transit use, and Sundararajan says it’s conceivable that 10% of U.S. consumer spending on personal transportation could be on platforms like Uber or Lyft within a few years.

But both companies have to be prepared to take losses in order to maintain a stronghold in dense urban areas and keep fares low enough to convince people outside of major metropolitan hubs to hail a car instead of driving themselves, Sundararajan says. For Uber, achieving profitability will require heavy spending on its food delivery and freight business. Already, Uber Eats is showing great potential, making up 13% of sales.

The scenic route

How big is Uber’s actual opportunity? That’s still unclear. For ride hailing, there has been great promise in the idea that everyone can share cars, and that personal car ownership will become at least slightly less necessary. But that hasn’t been the case yet. Urban congestion has actually gotten worse, and in some cities, car ownership is on the rise. Furthermore, Uber continues to lose a lot of money, and its massive growth trajectory is slowing. Ride-hail revenues increased 95% from $3.5 billion to $6.9 billion between 2016 and 2017. The following year, revenues grew only 33% to $9.1 billion. There’s also some concern about how much riders are actually using the platform.

“Users are growing more than 10% quarter over quarter, more than 30% year over year. But the number of rides per user has stopped growing three quarters ago at 5.5 per user. That’s why there is a lot of concern,” Pierre Ferragu, an analyst for New Street Research, said on Bloomberg TV at the end of April. “I think as long as you have very, very fast growth in the number of users, it is difficult to see the growth in usage, in the number of rides per user, because the new users you’re adding to your user base are just starting to use the service, have low usage–they are pulling down the number of rides per users.”

There is a quite a bit of opacity around what kind of growth potential Uber ultimately has going forward, and even if it does grow, there’s little clarity on when, or how, it will become profitable. Uber, in its filing with the Securities and Exchange Commission, said as much when it warned it “may not achieve profitability” in the section concerning risk factors.