I think they are creating a new market. People now use Uber in situations in which they never would have thought to take a cab. That is not to say this valuation makes sense
Perhaps so, but how substantial is that compared to the market of people who are just using Uber as a more convenient and reliable cab? Surely the latter is the vast bulk of their business.
currently but I can foresee a time when it is so convenient to hail a car that a lot of people just forgo car ownership entirely. Think of a future in which self driving cars work well and you can use your phone to get one to wherever you are within 10 minutes, get dropped off anywhere, never worry about parking and it costs far less than car ownership.