Uber’s stock fell 12% after it missed expectations on bookings, revenue and users when it reported earnings on Aug 8. The stock has continued to decline and recently hit an all-time low of below $34 a share, 25% below its IPO price of $45 a share.

Uber’s UBER, +3.32% slowing growth and mounting losses reaffirm our belief that this stock has no viable path to justifying its valuation. Even after the stock’s post-IPO decline, it remains significantly overvalued.

We’re not going to talk about Uber’s losses here, even though the amount of money the company loses (its operating cash flow was -$1.6 billion in the second quarter) is astonishing. Everyone knows Uber loses money. At this point, the amount of money you’re able to lose seems to be a point of pride in Silicon Valley.

Instead, let’s talk about the story Uber wants to highlight for investors. According to Uber, it is still in the early stages of capturing what it estimates to be a $12 trillion (yes, that’s trillion with a “T”) total addressable market that includes personal mobility, food delivery, and freight shipping. For context, the World Bank estimates that global GDP was around $80 trillion in 2017. Uber is saying it thinks it can capture 15% of global economic activity.

If that goal was remotely feasible, and Uber was at less than 1% of its total addressable market, you’d expect the company’s revenue growth to be rapidly accelerating. Instead, Uber’s revenue growth rate declined from 106% in 2017 to 42% in 2018, and it declined even further to just 14% year-over-year in the second quarter. Even that number overstates Uber’s growth, as it doesn’t account for the extra incentives given to drivers. Uber’s Core Platform Adjusted Net Revenue, which strips out driver incentives, grew by just 39% in 2018, and by just 7% year over year in the second quarter.

Uber’s adjusted net revenue and gross bookings

Sources: New Constructs and company filings

Uber’s Gross Bookings — the total amount of money spent by users on the platform — is also experiencing slower growth. Gross bookings increased by 31% year over year in the quarter, down from its 49% growth rate a year ago.

Uber’s slowing growth rate for Gross Bookings — and its even slower growth rate for Adjusted Net Revenue — shows the key problem with Uber’s theory of world domination: as Uber tries to protect and expand its market share around the world, it’s giving up a larger share of revenue to drivers and restaurants, a trend we expect to continue unabated.

Alarming decline in ‘Take Rate’ will continue

Uber’s Take Rate, the percentage of Gross Bookings it captures as Core Platform Adjusted Net Revenue, has been in steady decline throughout 2018. Figure 2 shows that the company’s take rate declined from 22% in the first quarter of 2018 to 17% in the most recent quarter.

Uber’s ‘Take Rate’

Sources: New Constructs and company filings

Uber’s declining Take Rate over the past year and a half stands in stark contrast to 2017, when its Take Rate increased from 19% to 22% over the course of the year.

It’s not hard to see what caused this reversal. Uber’s attempt to squeeze drivers in 2017, along with a series of PR disasters that led to the #DeleteUber campaign, drove both riders and drivers to other platforms, like Lyft.

According to data firm Second Measure, Uber’s share of the U.S. ride-share market declined from 82% at the beginning of 2017 to 71% at the end of the year.

The U.S. ride-share market is not the only market where Uber is losing share. Internationally, the company has been forced to throw in the towel in China, Russia, and Southeast Asia in recent years. Meanwhile, Uber Eats is losing share to DoorDash domestically.

Uber’s added incentives for riders and drivers have helped stem the market share losses — its domestic market share declined by a smaller amount, from 71% to 67%, in 2018. Despite its efforts to improve its image, Uber’s brand still has a worse reputation than Lyft with consumers, and its drivers recently went on strike in Los Angeles. It’s no surprise that Uber drivers are upset, as one recent study suggests they only earn around $9/hour after accounting for all costs involved.

In light of these ongoing struggles, one line from Uber’s latest 10-Q stood out. On page 63, Uber writes:

“As we aim to reduce Driver incentives to improve our financial performance, we expect Driver dissatisfaction will generally increase.”

Uber can’t achieve profitability without squeezing drivers, but if it tries to squeeze drivers it will lose market share. With wages rising at the fastest pace in a decade — and growing even faster for low earners — it seems likely that Uber’s take rate will continue to decline.

Companies like Bolt in Europe have shown that it’s possible to operate a ride-sharing app profitably, but you can’t do so while simultaneously trying to achieve a dominant market share worldwide. Uber can be a huge company, or it can be a profitable company, but it can’t be both.

This is an abridged version of a report titled “Uber Gives Investors the Worst of Both Worlds.”

David Trainer is the CEO of New Constructs, an independent equity research firm that uses machine learning and natural language processing to parse corporate filings and model economic earnings. Kyle Guske II and Sam McBride are investment analysts at New Constructs. They receive no compensation to write about any specific stock, style or theme. New Constructs doesn’t perform any investment-banking functions and doesn’t operate a trading desk. Follow them on Twitter @NewConstructs.