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Uber Joins Lyft in Race to Tap Investors
- uptown 8y agoTalk about surge pricing.
- sethbannon 8y agoJust when you thought bay area housing pries couldn't get any crazier, Uber files for IPO same week as Lyft.
- almost_usual 8y agoPrices have actually been dropping recently
- dilyevsky 8y agoThat. Funny enough redfin stubbornly shows my property is gradually up 6% since jan 1st with no drop while I know it’s been +15% just 6 months ago
- almost_usual 8y agoIt’s not unusual to find homes now that have been on the market for over a month and are well below their original list price. That used to not be the case until August. A friend of mine has been a bankruptcy lawyer in the city since the early 90s and expects rents / property values to significantly shift 6-8 months from now. Who knows maybe it’s all ‘baloney’. I’m not in the market, we already own a home in the city. It’s just interesting to observe the trend.
- spaceflunky 8y agoPrices where? In Las Vegas? Maybe. In the bay area? no.
- linkregister 8y agoLas Vegas prices are up 5% YoY [1]. San Francisco prices continue to climb and inventory is low [2]. Some regional Bay Area markets are experiencing a slowdown but most are not. 1. https://www.trulia.com/real_estate/Las_Vegas-Nevada/ https://www.trulia.com/real_estate/Las_Vegas-Nevada/ 2. https://www.bayareamarketreports.com/trend/san-francisco-home-prices-market-trends-news https://www.bayareamarketreports.com/trend/san-francisco-hom...
- almost_usual 8y agoYou can go on Trulia right now and find homes that have been on the market for over a month and are below their listing price in San Francisco. Things cooled off around August.
- almost_usual 8y agoIn San Francisco and the Bay Area yes. Things cooled off around August. Not sure where you got Las Vegas from.
- vadym909 8y agoIts a race against the market slowdown. The 6 months cooling (waiting time) is going to be the most nerve racking for employees wanting to sell.
- charlesdm 8y agoSounds like they might be better off selling now, on the secondary market.
- seattle_spring 8y agoMost can't do that, since rsus are on a double trigger vesting schedule. That means they don't have any stock to their name until the 6 month cooling period.
- creddit 8y agoThe number of Lyft and Uber employees is minuscule compared to the size of the housing market.
- closeparen 8y agoIn the 6 months from October 2017 to April 2017, the San Francisco housing market was a couple thousand units, per the MLS [0]. Lyft and Uber each have thousands of headquarters employees. The number of employees who will make windfalls in 2019 is easily larger than the number of homes for which they’ll compete. Minuscule compared to the housing stock sure. [0] https://www.allisonchapleau.com/marketreports/san-francisco-mid-year-market-report-2018 https://www.allisonchapleau.com/marketreports/san-francisco-...
- creddit 8y agoThat's in SF, a tiny portion of the "Bay Area housing market". Additionally, of those thousands of HQ employees, relatively few of them are going to gain the wealth needed to purchase SF homes. Consider how many of those in are non-tech and therefore low-equity positions as well as it being the case that many (most?) joined much later and had equity packages converging to market comp.
- QML 8y agoDo most Lyft and Uber employees even have large enough stock grants to buy houses?
- wpietri 8y agoAre they profitable? Last I heard they were losing quite a bit of money. [1] And even if they manage to squeak out a GAAP profit, I'm not sure if the business is sustainable. Given that a lot of the capital and operations costs end up on the books of drivers, it's harder to do the math for an end-to-end costs-vs-benefits comparison. [1] https://www.reuters.com/article/uber-results/uber-narrows-loss-but-still-a-long-way-from-profitability-idUSL1N1V611I https://www.reuters.com/article/uber-results/uber-narrows-lo...
- arcticbull 8y agoI want them to be successful because I have friends who work there, though I just don't see the numbers working out in ride-sharing.
- freyir 8y agoThey're not close to profitable. Recent quarterly losses: Q1: $601 million net loss Q2: $891 million net loss Q3: $1.07 billion net loss I'm not an accountant, but I'm not sure how this can go well for them.
- quickthrower2 8y agoI can't get my head around that. They lose a fortune every few minutes.
- propogandist 8y agoSnapchat is a failing business, but that didn't stop investors
- colinbartlett 8y ago$8,100 per minute apparently: https://www.google.com/search?q=1.07+billion+dollars+per+3+months+in+dollars+per+minute https://www.google.com/search?q=1.07+billion+dollars+per+3+m...
- masonic 8y agoQ1: $601 million net loss, Q2: $891 million net loss, Q3: $1.07 billion net loss ... "but they'll make it up in volume."
- almost_usual 8y agoSo are these companies rushing to IPO before a 'potential' recession occurs? Does anyone else not feel confident about this? It seems fear driven and not very calculated. Maybe I'm missing the bigger picture..
- drannex 8y agoLaunching before a recession is more ideal than before as funding would be easier to secure from the public vs private institutions especially if they continue losing money at this rate.
- koolba 8y agoI’m assuming the second “before” should be an “after”?
- almost_usual 8y agoRight but all this tells me is that the company will implode without further investment. The fact they are rushing to IPO seems like the private investors are wanting the average joe to be holding the bag when it does implode.
- strict9 8y agoDefinitely fear driven. Recently we've seen the biggest sustained downward drops in five years for tech stocks, I think beginning the process now is just too late.
- cinquemb 8y agoAgreed. FAANGMAN is down 22.4% from ATH, and probably in much better shape than Lyft or Uber. I'm probably going to wait for a pop in both prices of these (if they manage to go IPO anytime soon) and then short.
- kerng 8y agoFacebook is down for obvious reasons. Apple struggles with sales and innovation. Amazon just made no sense to be rising like that. Some of the others have done fairly well in the recent shake up, like Microsoft for instance.
- john_moscow 8y agoDecades ago companies competed in being the first to bring the product to the market, so enough prospects would try theirs first and become loyal users. These days the competition is about being the first to sell your story to the retail investor before the hype cools down and people get disillusioned about the entire business model (see GRPN, SNAP, etc). I'm truly wondering how sustainable is this and how hard the market correction will be...
- whitepoplar 8y agoMy favorite thing about the public markets is that it doesn't matter how much hype a company garners on TechCrunch, where the founders went to school, or how slick the company office spaces are. A piece of shit is a piece of shit, and conversely, a diamond is a diamond. That's not to say that public companies can't run on hype--they absolutely can--but eventually hype wears off and a company must show that it's a real business.
- paxys 8y agoHave you met TSLA? Public markets are as much based on hype than anything else.
- adventured 8y agoTSLA... the company that doubled its sales in the last three quarters and is outselling BMW and Mercedes in the US?
- markus_orlandis 8y agoJust because they've been performing does not imply that they're not overvalued. TSLA has been overvalued for years. That doesn't mean it's a bad investment, it just means it brings along higher risk.
- sethherr 8y agoHave you seen https://news.ycombinator.com/item?id=18618365 https://news.ycombinator.com/item?id=18618365 ? It brought interesting insight into additional factors in TSLA’s valuation
- imustbeevil 8y agoI'd confidently state that I love capitalism, but I'm not very happy with the idea that Uber could turn 17 billion dollars into 7 billion dollars and then hand the bag to retail investors. The thing I tell myself is that the money is all going to the same place anyway. Yeah, Uber is going to cash out and bomb from their IPO price, and everyone who buys will lose. But anyone who would buy Uber is going to do any number of equally irrational things with their money, not to mention the fact that no matter who "owns" the money it will either be sitting in a bank or another asset, so it doesn't really matter. http://fortune.com/2018/03/06/how-much-money-uber-spent/ http://fortune.com/2018/03/06/how-much-money-uber-spent/
- tanderson92 8y agoMany Fidelity mutual funds managing assets of retail investors hold (private) Uber stock.
- solarkraft 8y agoHm, would those be interested in keeping it private so Uber doesn't lose so much value or getting it public so they can quickly cash out?
- koolba 8y agoI have no lost sleep for retail investors who confuse speculation with investment. That’s their money and they do can as they wish. It’s the forced buy in by funds and pensions that I don’t like. Many are dictated by objective formulas like top N by market cap which may lead either Uber or Lyft to be included quite quickly. Biggest preventer for either may be the “four recent quarters of profitability” requirement. Depending on the IPO and crash timing, this could be a bad one.
- wbl 8y agoActive vs. Passive over the 20th century shows that active management doesn't work for the customer.
- dman 8y agoI am calling a market top here with the recent flurry of plans to IPO. Market has been shaky recently and I wonder if investors/founders are trying to get out ahead of a complete meltdown.
- tanilama 8y agoExactly. If they are not getting out now, they might not exit ever.
- kerng 8y agoAn IPO is not something you do just at one day out of the blue. It needs a lot of planning and paperwork. Uber has been planning this for for something like a year, since their new CEO came on board. They even started showing their finances and earnings since a while ago, which is not something a private company has to do.
- sjg007 8y agoGet out... what? It does not work that way. You can only sell when you have leverage. When you don't you take investment via private equity to bid your time.
- IshKebab 8y agoYeah everyone thinks it is a bubble. Investment in anything other than stocks gives you pretty much no return at the moment so everyone is pouring their money into the stock market, possibly resulting in crazy valuations.
- boxcardavin 8y agoI've noticed a surge ofex-uber folks looking to angel invest having been popping up in the past few months. I'm excited for this IPO purely for the money that will be invested in transportation this next year.
- john_moscow 8y ago>I'm excited for this IPO purely for the money that will be invested in transportation this next year. Not really. More like U.S. pension fund money being used to pay off the Saudi investors, or whoever is behind the SoftBank laundromat.
- greatamerican 8y agoIt is laughable how Uber MUST follow Lyft into everything. I remember when Lyft announced Line, Uber announced "Pool is in the works!!!"
- spiderPig 8y ago$120 billion? Wow, so SoftBank 3x’ed their $7bn investment in a year?
- kerng 8y agoYeah, even if the value and markets drop by 50%, it's still crazy. But long term Uber has potential due to their network and diversity now with other offerings.
- lsc 8y agoSo, like the hardest thing uber has done, I think? is that they've convinced local governments to not enforce taxi regulations. I think this was really hard, and I think it might be durable; I mean, I am generally kinda leftish and support a well-regulated market, but I also heavily use ridesharing in a way I never used taxi services. But, while those things are hard and valuable... they aren't exclusive to uber. I mean, ride sharing services are highly location based; like less than 1% of my uber use is done outside of the bay area (and most of the time, in those cases, I'd be willing to pay taxi rates and deal with taxi inconveniences) I personally have fantasised about building a ride-sharing federation system, or a ride sharing clearinghouse system; You'd hook up your local ride sharing co-op with my app, which would allow the customer to input source and destination addresses, and then get quotes from all interested providers. So.. what I'm saying is that while I see a lot of value in what uber built, I don't really see how they can prevent another company from moving in (on a per-market basis) and grabbing up all their customers. I mean, I already use both uber and lyft with a preference for whichever seemed cheaper last time I checked. That doesn't seem like a business with a lot of room to improve margins.
- googlemike 8y agoFor those saying this IPO is happening now due to market slowdown, Uber's CEO has been speaking of a 2019 IPO for a while[1]. I am not an investment banker, to me this seems far more pre-planned than a last minute rush before a heavy correction, no? For those who do know the space well, how far ahead would one be able to plan to time this right to happen to coincide with the current trends in the market? [1] https://www.wsj.com/articles/new-uber-ceo-says-company-could-go-public-in-18-months-1504119090 https://www.wsj.com/articles/new-uber-ceo-says-company-could... , Aug 30, 2017
- lawrenceyan 8y agoThey rushed the IPO date from 2020 to 2019. That should definitely make you think.
- pfarnsworth 8y agoNo they didn't. Ever since the new CEO joined, he said 2019.
- deleted 8y ago[deleted]
- lawrenceyan 8y agohttps://www.reuters.com/article/us-uber-ceo-idUSKCN1BA0JL https://www.reuters.com/article/us-uber-ceo-idUSKCN1BA0JL > "His plans include rebuilding Uber’s culture and growing market share as well as possibly conducting an initial public offering in 18 to 36 months, according to people who attended the meeting. It is common for venture capital-backed companies to signal an IPO at a vague time in the future." That Uber has chosen to go towards an earlier IPO rather than later from the upper end of 36 months to the lower end of 18 months is a fact. You can definitely argue that choosing to IPO earlier isn't necessarily a negative thing, but you can't argue away the fact that Uber has chosen an earlier timeline over a later one. Dara has never given a hard date for an IPO by the way, so I'm not sure what you mean by your statement of "he's always said it would be in 2019".
- crispytx 8y ago$120 Billion valuation on $2.6 billion in annual revenue? Seems like a pretty steep price to me! Note: I believe that $2.6B figure that I found does not include the amount of ride revenue that goes to the drivers, so maybe that's why the valuation is so high. If you add back in the drivers share of the revenue, maybe the valuation isn't that crazy.
- ndirish1842 8y ago> $120 Billion valuation on $2.6 billion in annual revenue? That number is quarterly revenue (and as you say does not include the share the driver takes)
- arcticbull 8y agoPricing them at 12X net revenue out the gate is pretty aggressive to say the least. Especially when their margins were -60% back in 2016 and in late 2018, and if anything they've gotten worse with the recent price drops. [1, 2] It's not fair to compare them to the negative margins enjoyed by other tech companies as most software companies are zero-marginal-cost businesses. It's far from clear to me that people would pay the double price per ride it would take to break even. A few years ago, if I'm not mistaken, they even switched to counting the entire value of an Uber Pool/Express Pool ride as net revenue (something they don't do with their core product offerings) muddying the water. Does anyone know if that's changed? [3] $120B would price them at the same net revenue multiple as Square ($2.21B/yr @ 25B market cap) while Square has much, much better margins (0% vs -60%) - and is itself widely regarded as not being a cheap buy. [1] https://techcrunch.com/2017/04/14/uber-shares-growing-financials-to-distract-from-negative-publicity/ https://techcrunch.com/2017/04/14/uber-shares-growing-financ... [2] http://nymag.com/intelligencer/2018/12/will-uber-survive-the-next-decade.html http://nymag.com/intelligencer/2018/12/will-uber-survive-the... [3] https://www.bloomberg.com/news/articles/2017-04-14/embattled-uber-reports-strong-sales-growth-as-losses-continue https://www.bloomberg.com/news/articles/2017-04-14/embattled...
- nopinsight 8y agoUber’s PR team probably rushed the news out right after Lyft’s IPO announcement to make sure that investors would spend as much time to consider its prospectus as they do Lyft’s. The possible market crash in 2019/2020 predicted by quite a few prominent economists and approximately $1 billion a quarter burn rate [1] have for a while been major reasons for their upcoming IPO. [1] https://www.bloomberg.com/news/articles/2018-11-14/uber-revenue-slows-as-quarterly-loss-surges-to-1-1-billion https://www.bloomberg.com/news/articles/2018-11-14/uber-reve...
- jacksproit 8y agoThere are enough economists that every possible prediction gets made. You shouldn’t lend credence to those who sow fear.
- nopinsight 8y agoIIRC, it was a survey of at least almost a hundred economists and 80% said by 2020. I also read reasonings by Roubini who predicted the 2008 Great Recession correctly and Martin Feldstein at Harvard. They sounded quite convincing. Interestingly, I did not encounter any opinion by an economist that it is unlikely to occur before 2020. The flurry of upcoming IPOs is also partial evidence of what top VCs and executives at major tech startups think.
- sjg007 8y agoOk. so what is the cause of this great recession? Nafta? China? What?
- deleted 8y ago[deleted]
- disgruntledphd2 8y agoRising interest rates and corporate debt, at a guess.
- dawhizkid 8y agoThe number of liquid millionaires in the Bay Area will be astounding come next year...
- arcticbull 8y agoSomething tells me property values are going up again. It's been a little weak lately but not after this.
- quickthrower2 8y agoWhat's the MO for a tech millionaire, do you retire in the bay area or f-off to somewhere where you can retire in luxury? Or keep grinding in SF?
- dawhizkid 8y agoA rank and file employee at one of these cos unless very early is not necessarily getting so much after taxes that they can retire in SF following an IPO...it's house money, not necessarily retirement money.
- quickthrower2 8y agoI guess its not mutually exclusive. Buy a house now, then sell it a few years later to retire somewhere else.
- arcticbull 8y agoThe median price per square-foot is around $1100 which means that if you make $2 million pretax in an IPO you’re left with approximately $1.2 million after-tax which is the average price of a nice 2br/1.5ba condo, a little short of a single family which is $1.5 million. I think the MO is based more on age and where you’re at in life, people tend to leave San Francisco in their mid to late 30s and either set up shop in the South Bay, or move home. IMO That’s why 1-2 bedrooms are so popular here. You buy, then keep it as a rental or sell when you leave.
- zakum1 8y agoSustainability is questionable for these firms. Ride hailing and similar services are more likely to evolve into local offerings. It is not a difficult business to replicate, technically, while regulation, infrastructure, social concerns can all be better addressed by local networks. A backlash is growing against exploitation of drivers and privacy weaknesses, which are natural results of the current global aspirations of these networks. I will stay out of these IPOs
- quickthrower2 8y agoIt's hard to replicate the chicken and egg market of drivers and passengers.
- lsc 8y agoI don't think it is? most drivers I've asked have used both uber and lyft and would switch for special incentives; I know a lot of passengers who only use lyft because of the bad reputation uber has, but of the uber riders, most of them also have lyft, and switch based on incentives. I mean, you need a critical mass in a short period of time within an area, but that's just a matter of throwing money at the problem, and there's no reason you couldn't be a perfectly reasonable regional player in this game. I mean, of course, at current prices, where margins are all but negative, that requires a lot of money; but in an environment where uber charged enough to have a healthy, profitable business? whenever the uber margins started to climb, you'd see regional competitors popping up. I mean, that's just my guess. We don't know, because we haven't seen a high margin ride sharing pricing scheme, not after uber made it clear that companies didn't need to follow taxi regulations.
- eeeeeeeeeeeee 8y agoYep, most drivers I’ve talked to also have pretty close communities of fellow Uber and Lyft drivers. They talk a lot and share tips and information. A better offer is all it would take people to jump ship.
- ChuckMcM 8y agoNow its all about the road show :-) Since it costs nothing, I'll put down my predictions so that I can come back later and see how wrong/silly I was. I predict that Uber won't meet their subscription goals during the road show and be forced to push off their IPO until 2020 at least, and that Lyft will make it through the gate but will come out with less than a 10% bump in price. I'm basing that on an investor sentiment that Lyft is more of a 'pure play' in the ride sharing market and Uber is a mix of several businesses which each have their own risks and can pull the company down even if their core business is ok. Now to wait a year and see how well it ages, hopefully better than MacAfee's bitcoin tweets! :-)
- erikpukinskis 8y agoI’ve turned around a little on Uber and Lyft. At first I thought Lyft was doomed because of network effect. Then I thought they were both doomed because Tesla, Waymo et al will just do an end-run around them with self-driving cars. Then I thought maybe Uber would survive, if they can develop their own self driving tech. But now I think, self driving tech will be a market of its own... there will always be a carmaker/software co wiling to sell vehicles and computers to someone with deep pockets. So that brings me back to Lyft and Uber both being viable strategically. Under that lens though, Uber looks a little weird with all of its debt and erratic behavior. Both of them are acquisition targets for anyone who survives the EV/autonomous vehicle production wars.
- delta-neutral 8y agoI just made a video summarising last week's HN post on Lyft's filing, check it out: https://youtu.be/Wa9uzVYA4K8 https://youtu.be/Wa9uzVYA4K8