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I think Uber is uniquely positioned to weather a recession, its business has counter-cyclical properties... in a recession when people are losing jobs, it's eas

by jquery 8y ago

I think Uber is uniquely positioned to weather a recession, its business has counter-cyclical properties... in a recession when people are losing jobs, it's easier to hire drivers and induce demand via lower prices. That stands in opposition to ad-based tech companies which seem to be hyper-cyclical.

grey-area 8y ago
ad-based tech companies which seem to be hyper-cyclical I agree ad-based tech companies are going to be really hurt by this recession. So Facebook, Twitter and Google will suffer, but particularly Facebook and Twitter may not survive the next few years. Smaller tech companies based on affiliate or advertising revenue won't stand a chance. I disagree that Uber is uniquely positioned to weather a recession. IMO they are too early - when we reach self-driving cars this type of company will be able to expand globally and prosper, but Uber is too early to do that, they're going to have to keep trying to make money with a huge host of freelance drivers and all the problems they bring (regulatory, cost, unions etc). They just raised $2 Billion on a 120B valuation, but they're still losing huge amounts of money per year. Uber lost $1 billion in the third quarter 2018. Those are astronomical losses, that's around $4B a year. I don't think they have any chance of hitting a profit in a recession, they may survive, but they're going to squander huge amounts of money to do so.
- tenpoundhammer 8y ago
  What makes ad based tech companies hyper-cyclical?
- cobookman 8y ago
  Disagree on google & facebook suffering. They are both too ingrained in our lives and sitting on significant cash reserves. Sure I expect RSU based pay to take a nose dive though. Facebook has 44 billion in cash, Google has > 100B. https://www.thestreet.com/story/14513643/1/apple-microsoft-google-are-sitting-on-crazy-amounts-of-cash.html https://www.thestreet.com/story/14513643/1/apple-microsoft-g...
  - grey-area 8y ago
    Facebook lost 7% of their value in one day today. I don’t use them, perhaps I’d feel differently if I did, but they seem very vulnerable to me given their revenue is ad based and they have massive credibility and reputational problems amongst both advertisers and readers. Google has a broader base but are still vulnerable as the money comes from ads, and that can dry up quickly.
    - cobookman 8y ago
      Even if Facebook has a 50% reduction in rev, they'd likely be breaking even, and not touch their massive cash reserve. 2017 earnings: * 40B of Rev * 5.5B cost to rev * Gross profit of 35B * Operating Income of 20B https://www.nasdaq.com/symbol/fb/financials?query=income-statement https://www.nasdaq.com/symbol/fb/financials?query=income-sta...
      - grey-area 8y ago
        Thanks for the figures, maybe they are too big to fail at this point. I’ll be interested to see how they weather the coming downturn and multiple scandals.
- jquery 8y ago
  >Uber lost $1 billion in the third quarter 2018. Another way to say this is, "Uber invested billions in expansion in Q3 2018". Uber is known to be profitable in almost all its mature markets. Rideshare will still exist, even if it consolidates to a single app, so you'd have to convince me Lyft or some other app would win over Uber before you can convince me Uber is going to go bankrupt. I can see Uber pulling out of non-mature markets that it isn't making headway in.
ghaff 8y ago
>induce demand via lower prices Perhaps. On the other hand, the more price sensitive someone is about using Uber, the more of a luxury good it probably is for them. If you have no real option but to use Uber (Lyft/taxi/etc.) then you'll probably have to suck it up and pay what it costs, at least up to a point. If you have alternatives like public transit and walking, those will likely still be cheaper which may be important in a downturn.
- jquery 8y ago
  You're also right, I think meant cycle-resistant, not counter-cyclical. In a recession, Uber will hurt along with most companies, just not as much as ad-based ones.

by jquery 8y ago

grey-area 8y ago

ad-based tech companies which seem to be hyper-cyclical I agree ad-based tech companies are going to be really hurt by this recession. So Facebook, Twitter and Google will suffer, but particularly Facebook and Twitter may not survive the next few years. Smaller tech companies based on affiliate or advertising revenue won't stand a chance. I disagree that Uber is uniquely positioned to weather a recession. IMO they are too early - when we reach self-driving cars this type of company will be able to expand globally and prosper, but Uber is too early to do that, they're going to have to keep trying to make money with a huge host of freelance drivers and all the problems they bring (regulatory, cost, unions etc). They just raised $2 Billion on a 120B valuation, but they're still losing huge amounts of money per year. Uber lost $1 billion in the third quarter 2018. Those are astronomical losses, that's around $4B a year. I don't think they have any chance of hitting a profit in a recession, they may survive, but they're going to squander huge amounts of money to do so.

tenpoundhammer 8y ago
What makes ad based tech companies hyper-cyclical?
cobookman 8y ago
Disagree on google & facebook suffering. They are both too ingrained in our lives and sitting on significant cash reserves. Sure I expect RSU based pay to take a nose dive though. Facebook has 44 billion in cash, Google has > 100B. https://www.thestreet.com/story/14513643/1/apple-microsoft-google-are-sitting-on-crazy-amounts-of-cash.html https://www.thestreet.com/story/14513643/1/apple-microsoft-g...
- grey-area 8y ago
  Facebook lost 7% of their value in one day today. I don’t use them, perhaps I’d feel differently if I did, but they seem very vulnerable to me given their revenue is ad based and they have massive credibility and reputational problems amongst both advertisers and readers. Google has a broader base but are still vulnerable as the money comes from ads, and that can dry up quickly.
  - cobookman 8y ago
    Even if Facebook has a 50% reduction in rev, they'd likely be breaking even, and not touch their massive cash reserve. 2017 earnings: * 40B of Rev * 5.5B cost to rev * Gross profit of 35B * Operating Income of 20B https://www.nasdaq.com/symbol/fb/financials?query=income-statement https://www.nasdaq.com/symbol/fb/financials?query=income-sta...
    - grey-area 8y ago
      Thanks for the figures, maybe they are too big to fail at this point. I’ll be interested to see how they weather the coming downturn and multiple scandals.
jquery 8y ago
>Uber lost $1 billion in the third quarter 2018. Another way to say this is, "Uber invested billions in expansion in Q3 2018". Uber is known to be profitable in almost all its mature markets. Rideshare will still exist, even if it consolidates to a single app, so you'd have to convince me Lyft or some other app would win over Uber before you can convince me Uber is going to go bankrupt. I can see Uber pulling out of non-mature markets that it isn't making headway in.

ghaff 8y ago

>induce demand via lower prices Perhaps. On the other hand, the more price sensitive someone is about using Uber, the more of a luxury good it probably is for them. If you have no real option but to use Uber (Lyft/taxi/etc.) then you'll probably have to suck it up and pay what it costs, at least up to a point. If you have alternatives like public transit and walking, those will likely still be cheaper which may be important in a downturn.

jquery 8y ago
You're also right, I think meant cycle-resistant, not counter-cyclical. In a recession, Uber will hurt along with most companies, just not as much as ad-based ones.