So it might seem as if Uber would have to seize a large fraction of the taxi market in order to justify its valuation. Some (myself included) say this is unrealistic, because Uber is unlikely to hold on to a monopoly or majority share of the rideshare market.[2]
The important factor, however, is that Uber is rapidly expanding what previously was the conceived size of this market. People who were not taking taxis previously are now using Ubers. There was an article on here recently about parents using Uber to ferry their children around. Some folks are leaving their cars at home, and are using Uber instead, because it makes sense financially (gas+car maintenance costs, in some cases, are higher than those of taking an Uber).
Beyond this, I expect to eventually see the integration of the rideshare market (Uber, Lyft, etc.) with other services, like delivery and last-mile transportation. This is already being done by Uber Rush. I would not be surprised to see Uber and its competitors greatly expand what we previously thought of as the Taxi industry, such that even a small share of this very large industry could be well worth the $25B valuation.
[0] http://iterativepath.wordpress.com/2014/05/22/if-you-most-ag...
[1] http://fivethirtyeight.com/features/uber-isnt-worth-17-billi...
[2] http://johnloeber.com/w/uber.pdf shameless plug