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Great example of how the headlines can drive a story more than the story itself. While Uber may have posted $708 million of losses, it is also up 18% in revenu

Great example of how the headlines can drive a story more than the story itself. While Uber may have posted $708 million of losses, it is also up 18% in revenue from last quarter. That's 3.4 billion dollars in the first quarter of 2017. Uber is making approximately $1,500,000 per hour. I dislike Uber as much as the next person for ethical reasons, but a company that can achieve millions of dollars in revenue per day, in 7 years, is quite extraordinary.

ProfessorLayton 9y ago
$1,500,000 per hour in revenue sounds great. Spending $1,872,000 per hour to bring in $1,500,000 per hour sounds less great. I understand that it takes money to make money, but this is one of the most extreme cases in a business.
- dmix 9y ago
  People were saying the same thing about Twitter forever and turned out to be largely wrong. I have a feeling the company making billions of dollars in revenue has some smart people who figured out how not to mess this up. But who knows maybe Uber will stop being the dominate taxi / self-driving car company globally over the next decade and mess it all up. Or not... but I doubt this large expenditure was done without foresight. The question is whether they can dominate for years to come in a high-growth industry, which it seems likely given the wide gap between them and the competition.
  - mrep 9y ago
    > People were saying the same thing about Twitter forever and turned out to be largely wrong. Twitter lost 456 million dollars in 2016 [1] and I don't remember them ever being profitable so i don't know how those people are wrong. [1]: https://en.wikipedia.org/wiki/Twitter https://en.wikipedia.org/wiki/Twitter
    - pfarnsworth 9y ago
      If you look, their losses are because of stock-based comp, not because of spending. It's generally a GAAP loss, not a cash loss.
      - kgwgk 9y ago
        That doesn't make it less real. The company is giving away shares and investors are diluted. That may be a good deal if the stock is overvalued, but probably investors do not share that view.
      - dx034 9y ago
        It still means that their owners won't see any of the money generated by the company. Before compensation, most companies are profitable. And in the end it doesn't matter to the shareholder if you pay stock compensation or cash.
        beavisthegenius 9y ago
        Not true. Stock compensation is dilutitive to existing shareholders putting future pressure on earnings per share and generally means you'll see a share buyback further reducing cash on balance sheet or increasing debt. Further, large blocks of lockup expirations cause selling pressure. Once talent sells stock compensation how do you then retain them? Do you grant more shares diluting existing shareholders further?
        dx034 9y ago
        It is different for incentives but not for the actual outcome. Obviously you'd have to compare the same compensation levels, i.e. 100k in cash vs 100k in stocks (at payout). For start ups it can turn out cheaper as the compensation will be lower in stocks if the company doesn't perform well. From a shareholder perspective it's compensation and shouldn't be treated differently. Excluding it from costs is dangerous as it gives the impression that it's optional costs when in reality, you need to pay the stock compensation to retain talent.
  - notyourwork 9y ago
    Are we talking about the same twitter? My understanding is they are not doing some well currently. Just because the doors are open for business doesn't mean said business is thriving. Also, twitter is a platform that has exclusivity. Uber is easily replaceable with Lyft or a taxi service's app. Just because a friend is using Uber doesn't mean I have to. The same doesn't apply to twitter, the platform is the value. This is what kept and keeps twitter afloat, Uber on the other hand paved the way for a shift in the way we consume cars as a service.
  - jpatokal 9y ago
    Um, Twitter is still not making a profit and their 2017 business plan seems to consist primarily of layoffs.
    - kesselvon 9y ago
      To be fair, they have like 4,000 employees. I don't understand how they need that many employees for a product that hasn't changed much since IPO
  - georgeecollins 9y ago
    Are you sure they were wrong about twitter? It still loses money. I am not saying that twitter isn't valuable, it just may have been overvalued. You certainly lost money if you bought stock in it five years ago.
  - gruez 9y ago
    >I have a feeling the company making billions of dollars in revenue has some smart people who figured out how not to mess this up. see: enron
- adriand 9y ago
  The fact they're losing money like this doesn't really mean anything because Uber isn't a normal business. It's not some little mom & pop outfit that has bills to pay. This is a company whose investors (e.g. the Saudis) have so much cash a billion here and a billion there barely matters. It's a place for absurdly wealthy people to park vast sums of cash on the bet that Uber will continue to gobble up marketshare from taxi companies, etc., until they're in a position to disrupt transit in general (and ride sharing services, too) with self-driving cars and who knows what else they'll come up with. I don't think comparisons with Twitter are all that apt. People need to go from point A to B. No one needs to tweet. The network effect of social networks is valuable but I think that value pales in comparison to transportation. The way we pay backs up this premise: we pay for Twitter and Facebook with our eyeballs and our data, but we pay for Uber with our credit cards.
  - mrep 9y ago
    > until they're in a position to disrupt transit in general (and ride sharing services, too) with self-driving cars and who knows what else they'll come up with. Considering they have a lawsuit against their self driving program [1], I wouldn't put so much faith on that [1]: https://www.theguardian.com/technology/2017/may/30/uber-fires-self-driving-car-head-google-waymo-trade-secrets https://www.theguardian.com/technology/2017/may/30/uber-fire...
  - BinaryIdiot 9y ago
    > The fact they're losing money like this doesn't really mean anything because Uber isn't a normal business. Yeah, Uber is different because of its insane amount of investor money but losing money is still losing money; it can't go on forever. So saying it doesn't mean anything is a bit shortsighted in my opinion. > It's a place for absurdly wealthy people to park vast sums of cash on the bet that Uber will continue to gobble up marketshare from taxi companies, etc., until they're in a position to disrupt transit in general (and ride sharing services, too) with self-driving cars and who knows what else they'll come up with. Seems like an extremely risky bet to me. I'm unconvinced they'll be able to make any decent amounts of money in this service especially considering the majority of auto manufacturers are working on similar capabilities; they'll be able to drive the price down far below Uber ever could unless they start manufacturing their own vehicles.
- thisisit 9y ago
  As a value investor or Warren Buffett follower would put it, they are very capital intensive. This can turn into a bad sign if they can't build a moat (monopoly of sorts) or take a hit on their margins.
  - marcosdumay 9y ago
    What I can even begin to imagine is why are they that much capital intensive? Uber's actual product is a SaaS. Everything else is contracted. Where is that much money going?
bitJericho 9y ago
I buy gas from across the street for 3 dollars a gallon. I sell it for 2. I sell 1.5 million dollars an hour. My business is doing great.
- dingo_bat 9y ago
  Are you also doing self driving car research from the money?
  - Marazan 9y ago
    Do you think Uber has spent 15 billion dollars on research? I have a bridge to sell you if you do.
    - dingo_bat 9y ago
      No, when did I say they spent everything on research? Most of the spending must have been on operating their service.
      - Marazan 9y ago
        Uber could have not run a loss making minicab service and spent even more on self driving car research.
- im3w1l 9y ago
  I think the problem is that you are not doing any value-add, or refinement. If you were somehow enhancing the gas, at a loss, then the example isn't so ridiculous.
rennir 9y ago
The reason they can make so much money is in part due to their lack of ethics and willingness to break rules/regulations. They haven't done anything extraordinary; they're just more willing to engage in shady behavior for that extra buck.

ProfessorLayton 9y ago

$1,500,000 per hour in revenue sounds great. Spending $1,872,000 per hour to bring in $1,500,000 per hour sounds less great. I understand that it takes money to make money, but this is one of the most extreme cases in a business.

dmix 9y ago
People were saying the same thing about Twitter forever and turned out to be largely wrong. I have a feeling the company making billions of dollars in revenue has some smart people who figured out how not to mess this up. But who knows maybe Uber will stop being the dominate taxi / self-driving car company globally over the next decade and mess it all up. Or not... but I doubt this large expenditure was done without foresight. The question is whether they can dominate for years to come in a high-growth industry, which it seems likely given the wide gap between them and the competition.
- mrep 9y ago
  > People were saying the same thing about Twitter forever and turned out to be largely wrong. Twitter lost 456 million dollars in 2016 [1] and I don't remember them ever being profitable so i don't know how those people are wrong. [1]: https://en.wikipedia.org/wiki/Twitter https://en.wikipedia.org/wiki/Twitter
  - pfarnsworth 9y ago
    If you look, their losses are because of stock-based comp, not because of spending. It's generally a GAAP loss, not a cash loss.
    - kgwgk 9y ago
      That doesn't make it less real. The company is giving away shares and investors are diluted. That may be a good deal if the stock is overvalued, but probably investors do not share that view.
    - dx034 9y ago
      It still means that their owners won't see any of the money generated by the company. Before compensation, most companies are profitable. And in the end it doesn't matter to the shareholder if you pay stock compensation or cash.
      - beavisthegenius 9y ago
        Not true. Stock compensation is dilutitive to existing shareholders putting future pressure on earnings per share and generally means you'll see a share buyback further reducing cash on balance sheet or increasing debt. Further, large blocks of lockup expirations cause selling pressure. Once talent sells stock compensation how do you then retain them? Do you grant more shares diluting existing shareholders further?
        dx034 9y ago
        It is different for incentives but not for the actual outcome. Obviously you'd have to compare the same compensation levels, i.e. 100k in cash vs 100k in stocks (at payout). For start ups it can turn out cheaper as the compensation will be lower in stocks if the company doesn't perform well. From a shareholder perspective it's compensation and shouldn't be treated differently. Excluding it from costs is dangerous as it gives the impression that it's optional costs when in reality, you need to pay the stock compensation to retain talent.
- notyourwork 9y ago
  Are we talking about the same twitter? My understanding is they are not doing some well currently. Just because the doors are open for business doesn't mean said business is thriving. Also, twitter is a platform that has exclusivity. Uber is easily replaceable with Lyft or a taxi service's app. Just because a friend is using Uber doesn't mean I have to. The same doesn't apply to twitter, the platform is the value. This is what kept and keeps twitter afloat, Uber on the other hand paved the way for a shift in the way we consume cars as a service.
- jpatokal 9y ago
  Um, Twitter is still not making a profit and their 2017 business plan seems to consist primarily of layoffs.
  - kesselvon 9y ago
    To be fair, they have like 4,000 employees. I don't understand how they need that many employees for a product that hasn't changed much since IPO
- georgeecollins 9y ago
  Are you sure they were wrong about twitter? It still loses money. I am not saying that twitter isn't valuable, it just may have been overvalued. You certainly lost money if you bought stock in it five years ago.
- gruez 9y ago
  >I have a feeling the company making billions of dollars in revenue has some smart people who figured out how not to mess this up. see: enron
adriand 9y ago
The fact they're losing money like this doesn't really mean anything because Uber isn't a normal business. It's not some little mom & pop outfit that has bills to pay. This is a company whose investors (e.g. the Saudis) have so much cash a billion here and a billion there barely matters. It's a place for absurdly wealthy people to park vast sums of cash on the bet that Uber will continue to gobble up marketshare from taxi companies, etc., until they're in a position to disrupt transit in general (and ride sharing services, too) with self-driving cars and who knows what else they'll come up with. I don't think comparisons with Twitter are all that apt. People need to go from point A to B. No one needs to tweet. The network effect of social networks is valuable but I think that value pales in comparison to transportation. The way we pay backs up this premise: we pay for Twitter and Facebook with our eyeballs and our data, but we pay for Uber with our credit cards.
- mrep 9y ago
  > until they're in a position to disrupt transit in general (and ride sharing services, too) with self-driving cars and who knows what else they'll come up with. Considering they have a lawsuit against their self driving program [1], I wouldn't put so much faith on that [1]: https://www.theguardian.com/technology/2017/may/30/uber-fires-self-driving-car-head-google-waymo-trade-secrets https://www.theguardian.com/technology/2017/may/30/uber-fire...
- BinaryIdiot 9y ago
  > The fact they're losing money like this doesn't really mean anything because Uber isn't a normal business. Yeah, Uber is different because of its insane amount of investor money but losing money is still losing money; it can't go on forever. So saying it doesn't mean anything is a bit shortsighted in my opinion. > It's a place for absurdly wealthy people to park vast sums of cash on the bet that Uber will continue to gobble up marketshare from taxi companies, etc., until they're in a position to disrupt transit in general (and ride sharing services, too) with self-driving cars and who knows what else they'll come up with. Seems like an extremely risky bet to me. I'm unconvinced they'll be able to make any decent amounts of money in this service especially considering the majority of auto manufacturers are working on similar capabilities; they'll be able to drive the price down far below Uber ever could unless they start manufacturing their own vehicles.
thisisit 9y ago
As a value investor or Warren Buffett follower would put it, they are very capital intensive. This can turn into a bad sign if they can't build a moat (monopoly of sorts) or take a hit on their margins.
- marcosdumay 9y ago
  What I can even begin to imagine is why are they that much capital intensive? Uber's actual product is a SaaS. Everything else is contracted. Where is that much money going?

bitJericho 9y ago

I buy gas from across the street for 3 dollars a gallon. I sell it for 2. I sell 1.5 million dollars an hour. My business is doing great.

dingo_bat 9y ago
Are you also doing self driving car research from the money?
- Marazan 9y ago
  Do you think Uber has spent 15 billion dollars on research? I have a bridge to sell you if you do.
  - dingo_bat 9y ago
    No, when did I say they spent everything on research? Most of the spending must have been on operating their service.
    - Marazan 9y ago
      Uber could have not run a loss making minicab service and spent even more on self driving car research.
im3w1l 9y ago
I think the problem is that you are not doing any value-add, or refinement. If you were somehow enhancing the gas, at a loss, then the example isn't so ridiculous.

rennir 9y ago

The reason they can make so much money is in part due to their lack of ethics and willingness to break rules/regulations. They haven't done anything extraordinary; they're just more willing to engage in shady behavior for that extra buck.