There's little doubt that today's young adults eventually become tomorrow's breadwinners and big spenders. To this end, it would be shortsighted of any company to not prepare for inevitable changes on the horizon.

Sometimes, though, investors can be so distracted by their hunt for future-minded, revolutionary companies that they forget to ask if there's any actual money to be made with a particular business model.

Uber Technologies (NYSE:UBER) -- better known as just Uber -- is one of these questionable companies. The market cheered the ride-hailing service's IPO in 2019, touting a decade's worth of steady revenue growth leading up its public offering. But, as we look back at Uber's earnings results with or without the impact of the COVID-19 pandemic, questions surface. Chief among them is whether or not more scale will do the company any good. Operating expenses, administrative spending, and marketing costs seem to scale in step with revenue, but to date, they have always exceeded revenue. Maybe this millennial-focused business model just doesn't work as-is.

A millennial holding out her hand to stop someone

Image source: Getty Images.

Uber is a cash-intensive operation

There's a clear market for ridesharing services like Uber and its rival Lyft, and it's dominated by millennials. Data collection outfit GlobalWebIndex reports that riders under age 34 account for nearly two-thirds of Uber's U.S. customers. Numbers from car-sharing service Zipcar tell the same story in a different way, indicating 53% of all millennials (by far the survey's biggest cohort) see themselves as likely to participate in a car-sharing program rather than owning a vehicle outright. At the same time, although more millennials own their own vehicles than not, an Ohio University report posted earlier this year makes clear that these consumers are much less likely to own and use their own vehicles compared with baby boomers or Gen Xers. Tech-driven alternatives to vehicle ownership that work well in urban settings are the big driver of these generational differences.

It seems like an ideal backdrop to capitalize on changing consumer preferences, particularly given that the generation behind millennials -- Gen Z -- is just as disinterested in auto ownership as they are. Research from Allison+Partners suggests that nearly one-third of the current under-24 crowd has plans to obtain a driver's license.

Just because the demand for ride-hailing service awaits, however, doesn't mean profits are also awaiting.

The graphic below puts the matter in perspective. Before COVID-19, revenue was clearly growing, but mostly in step with expenses. After the pandemic finally passes, revenue is expected to start growing again. Unlike the company's pre-coronavirus results, however, revenue growth is finally expected to outpace spending growth into and beyond 2021. Analysts presently project sales to fully eclipse expenses in the final quarter of 2022, with profit margins presumably widening throughout the following year. (Note that the expense surge from the second quarter of 2019 was nonoperational spending linked to the company's IPO.)

Uber Technologies' recurring expenses have habitually (in total) been greater than revenue, but analysts say they see profits on the horizon.

Data sources: Thomson Reuters and Uber Technologies. Chart by author. All dollar figures are in millions. GAAP = generally accepted accounting principles.

It's this anticipated future that's kept an unprofitable Uber on a bunch of investors' radars. There's a good reason this storied stock is still only 13% above its May 2019 initial public offering price of $45 per share, though. That is, the company hasn't yet convincingly explained how spending on things like marketing and driver payments will be curbed in the future relative to revenue. Perhaps they can't be. At more than 10 years of age, the company's certainly had ample opportunity to cull unnecessarily spending.

Time for tough questions

Never say never, of course. Anything's possible. Uber CEO Dara Khosrowshahi may well have a bead on the expenses that can be culled without doing more harm than good. Analysts' profit projections illustrated in the chart above might become a reality. If this cost-cutting is in the cards, however, it's time to shine some brighter light on that path to profitability.

That's especially the case given the sort of spending increase that may be required to keep Uber up and running into the foreseeable future.

The all-important millennial demographic that's less interested in owning vehicles than their predecessors? As it turns out, they're changing their minds now that the end of the COVID-19 contagion is in sight. Of the world's current non-car-owners, consumer research company EY says nearly a third of them intend to purchase a vehicle within the next six months. Of this third, 45% of them are expected to be millennials. That's clearly going to dampen demand from Uber's key market. Worse, it's entirely possible an ensuing price war among Lyft, Uber, and lesser rivals ultimately turns into a war over which company is willing to accept losses for the longest time.

If nothing else, would-be Uber investors should be asking some tough questions about spending plans.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.