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People disagree on this. Warren Buffet for example famously argues that SBC is a real expense even if non-cash, just like depreciation. More to the OPs point,

People disagree on this. Warren Buffet for example famously argues that SBC is a real expense even if non-cash, just like depreciation. More to the OPs point, I'm guessing Uber had FB-style RSUs that don't settle until an IPO or Change of Control. I'm not sure how this all gets accounted for, but given the recent IPO, it sounds like they booked a very large SBC charge this quarter to account for the immediate hit of all the previously issued RSUs finally being settled. Going forward, the number of RSUs that settle each quarter would therefore presumably not be nearly as large. But I'm not an accountant so the above may be wrong.

adventured 7y ago
> People disagree on this. Warren Buffet for example famously argues that SBC is a real expense even if non-cash, just like depreciation. There isn't much to disagree about. It's a real cost against shareholders (that's what Buffett is talking about) and it is not an expense against the business operations such that it depletes your cash or harms cash flow (the point a parent comment was making). Putting it broadly, stock compensation is primarily a hit against existing shareholder ownership. It debases their ownership of present or future profits. Uber could simultaneously produce $5 billion in positive cash flow from operations and issue $20 billion in stock every year to employees. They'd have a profitable business at the operational level and be drowning shareholders in dilution.
- munk-a 7y ago
  > it is not an expense against the business operations Except it is, you're borrowing money from the future if your company would ever consider issuing more stock in a followup round - it also may damage your ability to court private investors, not just because you lowered your share price but because you're more likely to dilute it more in the future. The stock market is a generally viewed today as an absurd concept composed of abstract financial wizardry - but it is grounded in the concept of partial ownership in a company and the assets of that company.

adventured 7y ago

> People disagree on this. Warren Buffet for example famously argues that SBC is a real expense even if non-cash, just like depreciation. There isn't much to disagree about. It's a real cost against shareholders (that's what Buffett is talking about) and it is not an expense against the business operations such that it depletes your cash or harms cash flow (the point a parent comment was making). Putting it broadly, stock compensation is primarily a hit against existing shareholder ownership. It debases their ownership of present or future profits. Uber could simultaneously produce $5 billion in positive cash flow from operations and issue $20 billion in stock every year to employees. They'd have a profitable business at the operational level and be drowning shareholders in dilution.

munk-a 7y ago
> it is not an expense against the business operations Except it is, you're borrowing money from the future if your company would ever consider issuing more stock in a followup round - it also may damage your ability to court private investors, not just because you lowered your share price but because you're more likely to dilute it more in the future. The stock market is a generally viewed today as an absurd concept composed of abstract financial wizardry - but it is grounded in the concept of partial ownership in a company and the assets of that company.