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Looks like Uber is better on every metric, total volume, growth, revenue, the only area they are behind is margin where they are taking less from their drivers

by raiyu 8y ago

Looks like Uber is better on every metric, total volume, growth, revenue, the only area they are behind is margin where they are taking less from their drivers than Lyft is. While Uber looks healthier especially given it's size, Lyft's reception after the IPO was quite negative, with the stock falling 30% immediately in the days that followed. Even with better economics and larger scale the larger question looms, which is how do these businesses turn profitable. Are they subsidizing a market and creating it by charging less, or will they reach a certain scale and be able to cut back on certain expenses which will give them profitability. I don't think Amazon is a fair comparison here, because they were investing in infrastructure, building out global logistics, which is different from Uber and Lyft. They should be much more profitable because they don't have to invest in that. They don't know warehouses and logistics, and everything else that e-commerce required. Also in the case of Amazon the supposed profits would be reinvested in the business with large CapEx spend, here it seems that the negative margins are being spent on sales and marketing, which isn't the same as what Amazon was doing when it was treading in the negative for a decade.

jjeaff 8y ago
But even today, my understanding is that essentially all of Amazon's profits are from AWS. So do we know for sure that their e-commerce model will ever be profitable?
- bradleyjg 8y ago
  Has anyone sat down and figured out what a reasonable valuation would be for AWS as a stand alone business? Surely not $900B, but half? A quarter?
  - hedora 8y ago
    Public cloud is about $300b per year right now. Assume amazon gets 66% long term, so $200b (this is unlikely for many reasons...) Cisco gets about $50b of revenue currently, and is worth ~250b. Extrapolating gets $1T. (I certainly don’t believe the above analysis; it’s terrible in multiple ways. For one thing, it ignores profit margins.)
bradleyjg 8y ago
Looks like Uber is better on every metric, total volume, growth, revenue, the only area they are behind is margin where they are taking less from their drivers than Lyft is. We lose money on every sale but make it up in volume is supposed to be a joke, not a business strategy!
- cavisne 8y ago
  They don't lose money on every sale. 30% margins for Lyft, 20% margins for Uber (and 10% for uber eats.
  - bradleyjg 8y ago
    Including amortizatized customer acquisition costs?
  - massivecali 8y ago
    Do those figures include refund fraud? I've reported several fraudulent trips; trips where the driver accepts my fare and pretend he's actually picked me up and then ends the trip after some time. When I requested a refund, Uber happily credits my account, not my credit card that they billed. Seems like some fancy accounting tricks that bump up numbers are being ignored too.
    - chrischen 8y ago
      You have to press for the refund. Refunds usually cost money to issue, so they would avoid it unless necessary.
      - massivecali 8y ago
        Crediting my account isn't a refund. I never requested a credit. So I stand by my assertion that it is fraud. The same goes for having to meticulously scour my trip logs for where the driver didn't end the ride when I exited the vehicle, or other such shenanigans.
baby 8y ago
Honestly I don't understand how anyone could be thinking that investing in Lyft's stocks is a good idea when they have a competitor like Uber. It's like investing in eBay when there is Amazon or investing in homestay when there is Airbnb.
- BMorearty 8y ago
  Like investing in eBay when there is Amazon? Maybe not the best analogy? eBay and Amazon both started in the 90s and were both HUGE successes for investors.
  - adventured 8y ago
    Further to that point and to their credit, ebay smashed Amazon in auctions.[1] Auctions was one of a dozen or so large failures on the part of Amazon to find a profit center. eBay wiped the floor with them and Amazon gave up relatively quickly. Since then, eBay has generated over $15 billion in profit in auctions, a figure Amazon struggles to match in its entire retail history despite the scale difference. All these years later, eBay is generating ~$2.3 billion in operating income and their auction business is under no serious competitive threat (it is a slow growth business however, basically fully saturated). Amazon's huge retail business is only barely able to match the profit of eBay's auction business. The ultimate value in Amazon of course wasn't retail. For eBay, the value is actually in the ecommerce. [1] 2001: https://www.zdnet.com/article/amazon-auctions-losing-momentum-to-ebay/ https://www.zdnet.com/article/amazon-auctions-losing-momentu...
    - ramraj07 8y ago
      eBay has indeed found an amazing niche. I've been gladly forking what one would consider an outrageous fee for auctioning off one's items, simply because the stuff sells so predictably. I regularly list stuff that one would consider junk and make a buck. Just auctioned off a decade old Asus eee PC for $50 (it still works though). Im so okay giving ebay 5 bucks for this ability! I made a few dollars, a working laptop found some home, and i threw less into the trash!
shubhamjain 8y ago
According to Aswath Damodaran [1], Professor at NYU and an expert at valuing companies, if he had to invest between Uber and Lyft, he will choose the latter. Who are we kidding? Uber, already a gigantic loss machine, continues to invest in loss-making ventures like Food Delivery and E-Scooters. Uber has spread itself to so many areas and markets that I can't see how it'll ever be profitable without making huge cutbacks. The volume and growth are of little significance when they are failing miserably to contain their losses. Compounding it is the fact that there's nothing sticky about any of their business ventures. Customers will choose the cheapest option, so they can never go beyond a certain range of prices. Even if Uber does become profitable, I highly doubt it ever will join the leagues of Apple, Google or Facebook. [1]: https://www.youtube.com/watch?v=K0wky8yyjuM https://www.youtube.com/watch?v=K0wky8yyjuM
- usaphp 8y ago
  > loss-making ventures like Food Delivery Uber Eats revenue was $1.5 billion in 2018, representing an increase of 149% from the $0.6 billion in revenue the food delivery service generated in 2017.
  - woah 8y ago
    What does that have to do with whether or not it’s loss making?
- bitxbit 8y ago
  Damodaran is “overvalued” and grossly undervalued the entire tech landscape over the past decade. I would not call him an expert in anything.
  - bradleyjg 8y ago
    We've been in a bull market for the past decade. I wouldn't trust any record, good or bad, that's only been tested in one half of a cycle.
    - 8y ago
giacaglia 8y ago
The stock being down doesn't mean that the IPO was quite negative. It just means that the price for the stock went down. If Twitter stocks were down after IPO, would that mean that buying FB stocks is a bad investment?
- giancarlostoro 8y ago
  I agree, too many people overlook market corrections: https://en.wikipedia.org/wiki/Market_correction https://en.wikipedia.org/wiki/Market_correction Basically I always suspect every IPO to have a period of rising stock prices, and eventually it will dwindle. That's just the way the market works. You can't expect prices to rise indefinitely. Some corrections come sooner than others. I find it much more healthy for Lyft to not have an extreme correction at least. Note I'm not invested in Lyft or any related company (Uber), I'm just a humble novice investor.
- arcticbull 8y ago
  The stock being down in the months after an IPO generally means the company raised on good terms as they were able to get more than market value for the equity they sold. That’s unrelated to whether it’s fundamentally a good company.
- lazyjones 8y ago
  There's still a difference between "stocks are down because the IPO was way overvalued but the company makes a healthy profit" (FB) and "stocks are down because the IPO was a little optimistic for a company that's bleeding money and has a bigger competitor".
adventured 8y ago
Amazon is a decent comparison. Not because of a similar capital investment requirement though (which as you noted in Amazon's case went into things like warehouses). Rather, because the original business isn't where the great value turned out to be. Amazon has a business that is worth an optimistic $150 billion if it were only traditional retail, without AWS and their relatively new ad business. That's assuming a richer valuation than their peers due to expectations of growth. The real value to Uber is not going to be in the ride hailing. It's going to be somewhere else, spawned out of the original business, riding on the back of the huge network they've put together in some manner. They'll find something else to monetize with richer margins, or they'll never justify a $100+ billion valuation. With everything they might be able to touch with their scale, I'd bet on them finding enough other business opportunities over time (that said, I also wouldn't be a buyer anywhere near the IPO valuation). The $10b IPO will buy them another likely five or six years of additional cash burn. And if they're smart, in the first year after the IPO, they'll dilute again and go get another $5 billion or so. With their need to find another business, their AWS, they can't have enough capital.
deleted 8y ago
[deleted]
Not_a_pizza 8y ago
> Even with better economics and larger scale the larger question looms, which is how do these businesses turn profitable. With self driving cars much further away than previously thought, this is the real danger for a company like Uber, who is bleeding money through their standard taxi-like services, quarter after quarter.
- 0wnt_U_B 8y ago
  Lyft won’t give up your 1099 if you move states. They require submission of a photo of a new government ID via email/text, social, full name, email address, and a photo of your previous license. I’m filing for an extension as a result.
JumpCrisscross 8y ago
> Lyft's reception after the IPO was quite negative, with the stock falling 30% immediately in the days that followed Pretty much everyone who invested before the IPO is up on their money. Lyft’s is not a story of a crap company going public. It’s a story of a crap IPO at the wrong price. JPMorgan priced the stock too high, didn’t adequately surveille for bad short selling, and generally numptied up a straightforward process.

by raiyu 8y ago

jjeaff 8y ago

But even today, my understanding is that essentially all of Amazon's profits are from AWS. So do we know for sure that their e-commerce model will ever be profitable?

bradleyjg 8y ago
Has anyone sat down and figured out what a reasonable valuation would be for AWS as a stand alone business? Surely not $900B, but half? A quarter?
- hedora 8y ago
  Public cloud is about $300b per year right now. Assume amazon gets 66% long term, so $200b (this is unlikely for many reasons...) Cisco gets about $50b of revenue currently, and is worth ~250b. Extrapolating gets $1T. (I certainly don’t believe the above analysis; it’s terrible in multiple ways. For one thing, it ignores profit margins.)

bradleyjg 8y ago

Looks like Uber is better on every metric, total volume, growth, revenue, the only area they are behind is margin where they are taking less from their drivers than Lyft is. We lose money on every sale but make it up in volume is supposed to be a joke, not a business strategy!

cavisne 8y ago
They don't lose money on every sale. 30% margins for Lyft, 20% margins for Uber (and 10% for uber eats.
- bradleyjg 8y ago
  Including amortizatized customer acquisition costs?
- massivecali 8y ago
  Do those figures include refund fraud? I've reported several fraudulent trips; trips where the driver accepts my fare and pretend he's actually picked me up and then ends the trip after some time. When I requested a refund, Uber happily credits my account, not my credit card that they billed. Seems like some fancy accounting tricks that bump up numbers are being ignored too.
  - chrischen 8y ago
    You have to press for the refund. Refunds usually cost money to issue, so they would avoid it unless necessary.
    - massivecali 8y ago
      Crediting my account isn't a refund. I never requested a credit. So I stand by my assertion that it is fraud. The same goes for having to meticulously scour my trip logs for where the driver didn't end the ride when I exited the vehicle, or other such shenanigans.

baby 8y ago

Honestly I don't understand how anyone could be thinking that investing in Lyft's stocks is a good idea when they have a competitor like Uber. It's like investing in eBay when there is Amazon or investing in homestay when there is Airbnb.

BMorearty 8y ago
Like investing in eBay when there is Amazon? Maybe not the best analogy? eBay and Amazon both started in the 90s and were both HUGE successes for investors.
- adventured 8y ago
  Further to that point and to their credit, ebay smashed Amazon in auctions.[1] Auctions was one of a dozen or so large failures on the part of Amazon to find a profit center. eBay wiped the floor with them and Amazon gave up relatively quickly. Since then, eBay has generated over $15 billion in profit in auctions, a figure Amazon struggles to match in its entire retail history despite the scale difference. All these years later, eBay is generating ~$2.3 billion in operating income and their auction business is under no serious competitive threat (it is a slow growth business however, basically fully saturated). Amazon's huge retail business is only barely able to match the profit of eBay's auction business. The ultimate value in Amazon of course wasn't retail. For eBay, the value is actually in the ecommerce. [1] 2001: https://www.zdnet.com/article/amazon-auctions-losing-momentum-to-ebay/ https://www.zdnet.com/article/amazon-auctions-losing-momentu...
  - ramraj07 8y ago
    eBay has indeed found an amazing niche. I've been gladly forking what one would consider an outrageous fee for auctioning off one's items, simply because the stuff sells so predictably. I regularly list stuff that one would consider junk and make a buck. Just auctioned off a decade old Asus eee PC for $50 (it still works though). Im so okay giving ebay 5 bucks for this ability! I made a few dollars, a working laptop found some home, and i threw less into the trash!

shubhamjain 8y ago

According to Aswath Damodaran [1], Professor at NYU and an expert at valuing companies, if he had to invest between Uber and Lyft, he will choose the latter. Who are we kidding? Uber, already a gigantic loss machine, continues to invest in loss-making ventures like Food Delivery and E-Scooters. Uber has spread itself to so many areas and markets that I can't see how it'll ever be profitable without making huge cutbacks. The volume and growth are of little significance when they are failing miserably to contain their losses. Compounding it is the fact that there's nothing sticky about any of their business ventures. Customers will choose the cheapest option, so they can never go beyond a certain range of prices. Even if Uber does become profitable, I highly doubt it ever will join the leagues of Apple, Google or Facebook. [1]: https://www.youtube.com/watch?v=K0wky8yyjuM https://www.youtube.com/watch?v=K0wky8yyjuM

usaphp 8y ago
> loss-making ventures like Food Delivery Uber Eats revenue was $1.5 billion in 2018, representing an increase of 149% from the $0.6 billion in revenue the food delivery service generated in 2017.
- woah 8y ago
  What does that have to do with whether or not it’s loss making?
bitxbit 8y ago
Damodaran is “overvalued” and grossly undervalued the entire tech landscape over the past decade. I would not call him an expert in anything.
- bradleyjg 8y ago
  We've been in a bull market for the past decade. I wouldn't trust any record, good or bad, that's only been tested in one half of a cycle.
  - 8y ago

giacaglia 8y ago

The stock being down doesn't mean that the IPO was quite negative. It just means that the price for the stock went down. If Twitter stocks were down after IPO, would that mean that buying FB stocks is a bad investment?

giancarlostoro 8y ago
I agree, too many people overlook market corrections: https://en.wikipedia.org/wiki/Market_correction https://en.wikipedia.org/wiki/Market_correction Basically I always suspect every IPO to have a period of rising stock prices, and eventually it will dwindle. That's just the way the market works. You can't expect prices to rise indefinitely. Some corrections come sooner than others. I find it much more healthy for Lyft to not have an extreme correction at least. Note I'm not invested in Lyft or any related company (Uber), I'm just a humble novice investor.
arcticbull 8y ago
The stock being down in the months after an IPO generally means the company raised on good terms as they were able to get more than market value for the equity they sold. That’s unrelated to whether it’s fundamentally a good company.
lazyjones 8y ago
There's still a difference between "stocks are down because the IPO was way overvalued but the company makes a healthy profit" (FB) and "stocks are down because the IPO was a little optimistic for a company that's bleeding money and has a bigger competitor".

adventured 8y ago

Amazon is a decent comparison. Not because of a similar capital investment requirement though (which as you noted in Amazon's case went into things like warehouses). Rather, because the original business isn't where the great value turned out to be. Amazon has a business that is worth an optimistic $150 billion if it were only traditional retail, without AWS and their relatively new ad business. That's assuming a richer valuation than their peers due to expectations of growth. The real value to Uber is not going to be in the ride hailing. It's going to be somewhere else, spawned out of the original business, riding on the back of the huge network they've put together in some manner. They'll find something else to monetize with richer margins, or they'll never justify a $100+ billion valuation. With everything they might be able to touch with their scale, I'd bet on them finding enough other business opportunities over time (that said, I also wouldn't be a buyer anywhere near the IPO valuation). The $10b IPO will buy them another likely five or six years of additional cash burn. And if they're smart, in the first year after the IPO, they'll dilute again and go get another $5 billion or so. With their need to find another business, their AWS, they can't have enough capital.

deleted 8y ago

[deleted]

Not_a_pizza 8y ago

> Even with better economics and larger scale the larger question looms, which is how do these businesses turn profitable. With self driving cars much further away than previously thought, this is the real danger for a company like Uber, who is bleeding money through their standard taxi-like services, quarter after quarter.

0wnt_U_B 8y ago
Lyft won’t give up your 1099 if you move states. They require submission of a photo of a new government ID via email/text, social, full name, email address, and a photo of your previous license. I’m filing for an extension as a result.

JumpCrisscross 8y ago

> Lyft's reception after the IPO was quite negative, with the stock falling 30% immediately in the days that followed Pretty much everyone who invested before the IPO is up on their money. Lyft’s is not a story of a crap company going public. It’s a story of a crap IPO at the wrong price. JPMorgan priced the stock too high, didn’t adequately surveille for bad short selling, and generally numptied up a straightforward process.