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You're not stupid! Uber is less vulnerable than DD (mainly because their margins are higher). But it's still a cost-intensive business. Subsidies, local offices
by fluxic 10y ago
You're not stupid! Uber is less vulnerable than DD (mainly because their margins are higher). But it's still a cost-intensive business. Subsidies, local offices, marketing, it adds up. For reference, see [0], although Uber sold their Chinese business to a competitor soon after that article was published.
Also, equity = shares in Uber. Debt = loans. You have less liability when you take somebody's money in exchange for a % of the company, than when you take somebody's money and guarantee you'll pay it back + interest ;)
[0] https://www.bloomberg.com/news/articles/2016-08-25/uber-loses-at-least-1-2-billion-in-first-half-of-2016 https://www.bloomberg.com/news/articles/2016-08-25/uber-lose...
- sean_patel 10y agoWow! Thanks for the article and the explanation. Makes sense now. P.S. If you see this, how different is Amazon? Isn't Amazon also losing millions of $, yet their stock is soaring to all times high?
- douche 10y agoAs I understand it, Amazon's MO has been ploughing all of their profits into capex to expand their infrastructure, so they don't show much profit, despite continually increasing their revenue.
- shostack 10y agoThe other key piece is that Amazon's infrastructure investments often double as product R&D since their business increasingly shifts to selling access to their infrastructure vs selling products directly to consumers.