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How is it possible that Uber has $6.5bn in cash? Weren't they losing almost $4bn a year?

TAForObvReasons 8y ago
https://www.crunchbase.com/organization/uber https://www.crunchbase.com/organization/uber > Total Funding Amount: $21.7B The real question is how companies thought it was a great idea to invest in them to the tune of $21.7B.
- huangbong 8y ago
  Worldwide consumer transportation monopoly
  - jellicle 8y ago
    With no barrier to entry and selling $10 rides for $5.
  - fwdpropaganda 8y ago
    There's no barrier to entry. Some people claim that there is a barrier to entry which is that "Uber has all the drivers". However every big city I go you see local players. Not only Lyft and Yandex, but regular cabs, or regular cabs dispatched by an app (as opposed to telephone) etc. No barrier to entry.
    - nstart 8y ago
      Agreed on this one. I'll also add, low barrier to clone but high barrier to localise. Both are not good for Uber. Sri Lanka launched it's own (privately owned) ride hailing/sharing app ahead of Uber entering our market. A lot of drivers work with both companies, but Uber is being squeezed out bit by bit. There's a lot of money in the local player to be sure, but even then, it's crazy to think that the giant international player couldn't take on our local market all that well. This is despite the local player doing all the hard work of training the market to understand how this concept works. Both drivers and riders needed significant investment. Uber came into a primed market and failed to capture it despite burning money on ridiculous bonuses for drivers at the start. Recent sales in Asia prove this inability to capture localised markets is not a one off.
    - valuearb 8y ago
      No barrier to entry, yet despite two years of the most horrendous (and self inflicted) press imaginable, Uber still has a massively dominant position? Reminds me of another company with no barrier to entry, Coke. It’s massive profits led Sam awaiting to spend millions creating Sams Cola, which crushed Coke in taste tests and got massive distribution from the get-go. And utterly failed. If you can understand the massive barriers to entry Coke really had, you’ll begin to understand how massive Uber’s competitive barriers are.
      - probe 8y ago
        Can you elaborate more on the Coke and Uber comparison? Why did Coke win and maintain a competitive advantage, was it just brand?
        valuearb 8y ago
        Cokes Brand was built on mouth feel, ie once someone develops a preference for Coke, they are generally immune to switching sodas. Coke did a ton of marketing to reinforce hat. Uber’s moat is built on its brand as well, not just the massive awareness of their services, but the fact so many people have their app, and they have the most drivers. More drivers makes the customer experience that much better. Just looking at app installs, it will take Lyft years and will cost hundreds of millions just to catch Uber in US app installs.
      - mseebach 8y ago
        Barrier to entry typically means something something physical or formal. Needing to build a billion dollar fab is a barrier to entry in the micro chip business, needing more than a decade of training is a barrier to entry to being a doctor. Having to produce a better product than your competitor isn't generally considering a barrier to entry, that's more on the competitive advantage side of things. Coca-Cola has an amazing brand, and that's very difficult to complete with. Uber works really, really well, there are a lot of details that aren't just "push button, get car". I've used used a few of the alternative apps, and while they generally clear the bar of "working", they are a long way from being as good as Uber. That said, it's a one way ratchet, and some of the apps are catching up quickly. Sidenote on barriers to entry: one of the original meanings of "disruption" was the tearing down of barriers to allow new entry and competition in a field. Ubers steamrolling of medallion schemes constitutes such a kind of "disruption". Of course, once disrupted, there's no closing the door behind you.
foobar1962 8y ago
Yes... and I read somewhere (probably from an article posted here but cannot find the reference) that they would run out of cash mid-2019. And their self driving car program has crashed...
- adventured 8y ago
  That's incorrect. At the most recent quarter rate, Uber will burn closer to $1 to $1.2 billion in cash over the next four quarters, assuming zero further margin improvement (unlikely given their growth rate + priority on lowering their burn). It's public information that they currently have $6.3 billion in cash and an available $1.5 billion term loan on top of that. Uber's cash + the loan facility is likely to last a minimum of five years. More likely, they'll reach profitability or near it within six to eight quarters at the rate they're growing the business + reducing losses. A small adjustment (10%) upward in pricing over several quarters, a small reduction in their operational cost to sales ratio, on top of their high growth rate = very easy path to break-even. http://fortune.com/2018/05/24/uber-revenues-sales-drivers-quarter/ http://fortune.com/2018/05/24/uber-revenues-sales-drivers-qu...
  - foobar1962 8y ago
    It was an Ars Technica story from 27 March 2018: >... at its current burn rate the company will run out of money in 2019 if it can't raise more. https://arstechnica.com/cars/2018/03/ubers-self-driving-car-project-is-struggling-the-company-should-sell-it/ https://arstechnica.com/cars/2018/03/ubers-self-driving-car-...
misun78 8y ago
Uber’s losses have shrunk siginifantly. Google for Q1 financials.
esturk 8y ago
Uber gained about $2.9 billion from trading away their Southeast Asia and Russian operations. https://mobile.nytimes.com/2018/05/28/technology/uber-grab-southeast-asia.html https://mobile.nytimes.com/2018/05/28/technology/uber-grab-s...
- adventured 8y ago
  They did not gain $2.9 billion in cash from that. The transactions gave Uber ownership stakes in combined businesses. They got 27.5% of Grab. They got 36.6% of the Yandex merged entity. The gain referred to in the article is for accounting purposes. https://arstechnica.com/cars/2018/03/uber-sells-southeast-asian-business-to-regional-rival-grab/ https://arstechnica.com/cars/2018/03/uber-sells-southeast-as... https://www.bloomberg.com/news/articles/2017-11-24/uber-s-plan-to-merge-russian-business-with-yandex-approved https://www.bloomberg.com/news/articles/2017-11-24/uber-s-pl...
volgo 8y ago
Because those numbers are thrown out by journalists who don't understand finances. Uber is, and has always been, very financially sound and no where near the "collapse" that the media likes to tout. They're hated (by a small and fervent population) for a good reason, but it has no impact on math
- fwdpropaganda 8y ago
  Ok, care to explain the math to me then? You sound like you know something I don't.

https://www.crunchbase.com/organization/uber https://www.crunchbase.com/organization/uber > Total Funding Amount: $21.7B The real question is how companies thought it was a great idea to invest in them to the tune of $21.7B.

huangbong 8y ago
Worldwide consumer transportation monopoly
- jellicle 8y ago
  With no barrier to entry and selling $10 rides for $5.
- fwdpropaganda 8y ago
  There's no barrier to entry. Some people claim that there is a barrier to entry which is that "Uber has all the drivers". However every big city I go you see local players. Not only Lyft and Yandex, but regular cabs, or regular cabs dispatched by an app (as opposed to telephone) etc. No barrier to entry.
  - nstart 8y ago
    Agreed on this one. I'll also add, low barrier to clone but high barrier to localise. Both are not good for Uber. Sri Lanka launched it's own (privately owned) ride hailing/sharing app ahead of Uber entering our market. A lot of drivers work with both companies, but Uber is being squeezed out bit by bit. There's a lot of money in the local player to be sure, but even then, it's crazy to think that the giant international player couldn't take on our local market all that well. This is despite the local player doing all the hard work of training the market to understand how this concept works. Both drivers and riders needed significant investment. Uber came into a primed market and failed to capture it despite burning money on ridiculous bonuses for drivers at the start. Recent sales in Asia prove this inability to capture localised markets is not a one off.
  - valuearb 8y ago
    No barrier to entry, yet despite two years of the most horrendous (and self inflicted) press imaginable, Uber still has a massively dominant position? Reminds me of another company with no barrier to entry, Coke. It’s massive profits led Sam awaiting to spend millions creating Sams Cola, which crushed Coke in taste tests and got massive distribution from the get-go. And utterly failed. If you can understand the massive barriers to entry Coke really had, you’ll begin to understand how massive Uber’s competitive barriers are.
    - probe 8y ago
      Can you elaborate more on the Coke and Uber comparison? Why did Coke win and maintain a competitive advantage, was it just brand?
      - valuearb 8y ago
        Cokes Brand was built on mouth feel, ie once someone develops a preference for Coke, they are generally immune to switching sodas. Coke did a ton of marketing to reinforce hat. Uber’s moat is built on its brand as well, not just the massive awareness of their services, but the fact so many people have their app, and they have the most drivers. More drivers makes the customer experience that much better. Just looking at app installs, it will take Lyft years and will cost hundreds of millions just to catch Uber in US app installs.
    - mseebach 8y ago
      Barrier to entry typically means something something physical or formal. Needing to build a billion dollar fab is a barrier to entry in the micro chip business, needing more than a decade of training is a barrier to entry to being a doctor. Having to produce a better product than your competitor isn't generally considering a barrier to entry, that's more on the competitive advantage side of things. Coca-Cola has an amazing brand, and that's very difficult to complete with. Uber works really, really well, there are a lot of details that aren't just "push button, get car". I've used used a few of the alternative apps, and while they generally clear the bar of "working", they are a long way from being as good as Uber. That said, it's a one way ratchet, and some of the apps are catching up quickly. Sidenote on barriers to entry: one of the original meanings of "disruption" was the tearing down of barriers to allow new entry and competition in a field. Ubers steamrolling of medallion schemes constitutes such a kind of "disruption". Of course, once disrupted, there's no closing the door behind you.

foobar1962 8y ago

Yes... and I read somewhere (probably from an article posted here but cannot find the reference) that they would run out of cash mid-2019. And their self driving car program has crashed...

adventured 8y ago
That's incorrect. At the most recent quarter rate, Uber will burn closer to $1 to $1.2 billion in cash over the next four quarters, assuming zero further margin improvement (unlikely given their growth rate + priority on lowering their burn). It's public information that they currently have $6.3 billion in cash and an available $1.5 billion term loan on top of that. Uber's cash + the loan facility is likely to last a minimum of five years. More likely, they'll reach profitability or near it within six to eight quarters at the rate they're growing the business + reducing losses. A small adjustment (10%) upward in pricing over several quarters, a small reduction in their operational cost to sales ratio, on top of their high growth rate = very easy path to break-even. http://fortune.com/2018/05/24/uber-revenues-sales-drivers-quarter/ http://fortune.com/2018/05/24/uber-revenues-sales-drivers-qu...
- foobar1962 8y ago
  It was an Ars Technica story from 27 March 2018: >... at its current burn rate the company will run out of money in 2019 if it can't raise more. https://arstechnica.com/cars/2018/03/ubers-self-driving-car-project-is-struggling-the-company-should-sell-it/ https://arstechnica.com/cars/2018/03/ubers-self-driving-car-...

misun78 8y ago

Uber’s losses have shrunk siginifantly. Google for Q1 financials.

esturk 8y ago

Uber gained about $2.9 billion from trading away their Southeast Asia and Russian operations. https://mobile.nytimes.com/2018/05/28/technology/uber-grab-southeast-asia.html https://mobile.nytimes.com/2018/05/28/technology/uber-grab-s...

adventured 8y ago
They did not gain $2.9 billion in cash from that. The transactions gave Uber ownership stakes in combined businesses. They got 27.5% of Grab. They got 36.6% of the Yandex merged entity. The gain referred to in the article is for accounting purposes. https://arstechnica.com/cars/2018/03/uber-sells-southeast-asian-business-to-regional-rival-grab/ https://arstechnica.com/cars/2018/03/uber-sells-southeast-as... https://www.bloomberg.com/news/articles/2017-11-24/uber-s-plan-to-merge-russian-business-with-yandex-approved https://www.bloomberg.com/news/articles/2017-11-24/uber-s-pl...

volgo 8y ago

Because those numbers are thrown out by journalists who don't understand finances. Uber is, and has always been, very financially sound and no where near the "collapse" that the media likes to tout. They're hated (by a small and fervent population) for a good reason, but it has no impact on math

fwdpropaganda 8y ago
Ok, care to explain the math to me then? You sound like you know something I don't.