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"Rides produced $742 million in EBITDA, up some 281%" Time for the narrative of Uber burning VC money/subsidizing rides/selling-$2 bills-for-$1 to die?
by misun78 7y ago
"Rides produced $742 million in EBITDA, up some 281%"
Time for the narrative of Uber burning VC money/subsidizing rides/selling-$2 bills-for-$1 to die?
- tryptophan 7y agoIt hasn't been true for a while. On a per-ride basis in their developed service areas they have been profitable for a long time.
- disgruntledphd2 7y agoAnd yet they are still losing money. Odd, that.
- n_o_u 7y agogrowth tends to do that.
- ProAm 7y agoHow long does a company need to grow for? They are 11 years old and there is arguably only 1 competitor.
- robryan 7y agoThey operate in so many markets though, many competitors in many markets. For example in Australia Ola is generally cheaper (especially so when there is Uber surge pricing). It probably isn't sustainable for Ola either, but at the same time, can Uber afford to give up those users, even in the short term?
- treebornfrog 7y agoExactly.
- harryh 7y agoAmazon was essentially break even for longer than that. Worked out ok there.
- deleted 7y ago[deleted]
- OnlineGladiator 7y agoAmazon was building expensive infrastructure and improving their brand, whereas people are increasingly coming to associate Uber as tarnished (don't pay their drivers enough, don't screen for rapists, dumpster fire politics, killed a pedestrian testing their self-driving cars recklessly, continue to hemorrhage money after a decade of operations). Amazon breaking even is very different from Uber lighting cash on fire to keep the lights on. Amazon was working towards something - becoming the best online shopping place possible (and building the logistical infrastructure to make that happen, allowing them to offer better services such as guaranteed fast shipping). Uber is just continually rearranging the chairs hoping to keep it going as long as they can. There is nothing about Uber that scales without losing more money. If there were, they would have figured out how to make money by now. It's not like they haven't had enough time and money.
- scarface74 7y agowhy Is the one outlier always used as an example? But even with that outlier it’s still not a great example. Amazon Retail is a low margin, low profit business. 75% of Amazon’s profit comes from AWS. Unless you think that Uber is somehow going to pull a high margin non related business out some type of way, it’s really a horrible comparison.
- grandmczeb 7y agoArguably one competitor if you just consider North America and exclude taxis or anything outside of their rideshare business.
- flukus 7y agoAnd those competitors are also subsidizing rides. In many cases they are also paying drivers better to the point you'll get uber drivers recommending other services. The winner is whoever can pump more investor money in the longest, and even the can be disrupted by new rounds of investors.
- vikramkr 7y agoBut what sort of growth are they spending money on - and is what they're spending money on worth it? If you're spending money on free rides, you might be getting users that aren't going to be profitable long term. If you're spending that money on r&d moonshots like developing your own self driving cars, then it's not looking so good for you when tesla/waymo/etc are so much further ahead. And if economies of scale begin working against you, where as you get more and more drivers, they begin to organize and lobby and push to become classified as employees and raise your costs, then you might be facing a reconing very soon.
- KaoruAoiShiho 7y agoThey're subsiding geographies that haven't yet reached critical mass for economy of scale to kick in. In mature markets they're profitable, so eventually when the other markets become mature for uber they'll also be profitable. The evidence is there. The money is put to good use. The only question mark is waymo/tesla/etc competition otherwise Uber would be a good bet.
- wpietri 7y agoI think another question for me is how much their "mature" markets have any real moat. Uber intentionally killed of most of their competition, hoping for monopoly rents. But rideshare strikes me as a very low barrier to entry. Uber was certainly technologically innovative a decade ago. But a lot of the mobile and geo stuff is now off-the-shelf or as-a-service tech. Now that they're not subsidizing rides, even in this discussion we see people feeling the pinch. Uber's going to have to extract a lot of profit to reward investors and pursue growth. I think they're becoming vulnerable to low-cost competitors who just want to get by. E.g., driver co-ops and local specialty companies grabbing market niches.
- KaoruAoiShiho 7y agoSo just like how Uber had to spend billions to subsidize markets to maturity, it's the same with any future competitor, low cost isn't a thing. Yet if Uber is already there the end market wouldn't look like how it currently is, it would be a mutually assured destruction with Uber where nobody wins. So spending billions to achieve nothing makes that possibility remote. Any competitor would have to bring disruptive technology.
- SilasX 7y agoBecause of unrelated, ride-count-independent costs. For example, massively unprofitable self-driving car and food delivery businesses. Those reasons have nothing to do with Uber being unable to charge more for the rides than the cost to provide, which is not true and a widely held misconception. An investor should care about "can they make money selling rides". That business unit can always be broken off from orthogonal ventures.
- wpietri 7y agoDepends on who you think of as paying the costs. One of Uber's "innovations" is to get the key capex, cars, off their balance sheet. Along, of course, with major opex contributors like repairs. Instead, those burdens now fall on individual drivers. It's really not clear to me if Uber would be truly profitable if they had to pay a reasonable wage plus the actual costs. So instead the question becomes how long they can keep exploiting workers like this. AB5 suggests that the answer is not "forever".
- xmprt 7y agoI've yet to hear a good argument for how they're exploiting workers. Tons of companies are always hiring yet people chose to work for Uber. Most people hate their job and wish they were paid more but Uber is the only company that will welcome you back with open arms if you don't show up for a month without notice.
- deleted 7y ago[deleted]
- wpietri 7y agoI would suggest Google. There's a ton of discussion around California's AB5 that explains the issues.
- jon-wood 7y agoI have many issues with Uber, but at least in the UK the argument that they’re pushing costs of fuel/repairs on to the drivers isn’t really a valid one. Most taxi drivers in the UK are self-employed, and pay a fee to one of the local cab companies in return for jobs getting pushed out to them, and they’re responsible for all the associated costs of running a taxi and remaining licensed to do so.
- mathattack 7y agoMarketing costs in new markets have to be expenses immediately. This isn’t saying they are wildly profitable, just that some traditional metrics miss value in high growth companies.
- busterarm 7y agoMaybe. Uber has more than doubled in price for me for just about any given fare over the last year. I use it much less than I used to. I'd like to see rides up as well as revenue from those rides.
- majormajor 7y agoUber costs 2 to 3 times as much for me as it did 4 years ago, so yeah, I think that's changed. But I've also been riding much less.
- agumonkey 7y agoIs it a flat rise or just new tricks like late night fees for "faster" matching ?
- wpietri 7y agoWait, Uber is now selling cuts in line? I hope the ghosts of their kindergarten teachers haunt them as they sleep.
- AlexandrB 7y agoWhat do you mean “now”? That’s what surge pricing always was. The intent hasn’t changed, just the mechanisms.
- agumonkey 7y agoWell that how I understood their "communication". They were so concerned about me waiting in a crowded area at night that they gently offered to take 3-4x times my money just to be sure a driver comes faster. This levels of concerns warms my blood.
- busterarm 7y agoAs bad as that sounds, there are some nights where I'd just pay that. Two years ago on July 4th I ended up stuck far from home and mass transit and had to walk a few miles and still wait 90 minutes to get an Uber. I would have paid $200 or more for that Uber if it was fast.
- tempsy 7y agothey were already profitable on rides in their most mature cities
- deleted 7y ago[deleted]
- awa 7y agoIt's "Adjusted EBITDA" which being a non-GAAP measure in this case excludes Corporate G&A and Platform R&D. This line item was -644 million.
- misun78 7y agoSource?
- deleted 7y ago[deleted]
- H8crilA 7y agoThe OP link, of course. Scroll to the GAAP section, earnings are under "CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS". The GAAP loss per quarter is $1.096B, which comes out to $0.64 per share.
- deleted 7y ago[deleted]
- texasbigdata 7y agoCash flow from operations was negative 3 billion excluding the "cash held by insurer" and capex was 0.5 billion. This puts unlevered free cash flow at closer to negative $3.5B. The way they are breaking out segments seems to imply that theres heavy losses in non-North America so of they were to shut off the rest of world stuff maybe it looks better.
- toomuchtodo 7y agoDoes this imply a ~1 year runway considering $11B cash/cash equivalents on hand?
- texasbigdata 7y agoI believe that was an annual number. Not sure runway makes sense for an entity this big. They recognized billions of stock comp. There's enough enterprise value to generate cash in a variety of ways. The company might kick and scream to not do anything dilutive but its hard to see a scenario where they couldn't access the capital markets if backed against the wall (albeit at maybe an expensive rate). But I'm not intimately familiar with this stock.
- deleted 7y ago[deleted]
- thesausageking 7y agoGiven you work for you Uber, I don't think it's an accident that you misquoted it and left out a key word: "Adjusted". They have $742m of "Adjusted" EBITDA, which is a metric they made up to make themselves look good, similar to WeWork's "Community EBITDA". In the real-world, they lost $1.1B in Q4 and $8.5B for 2019. Revenue is growing and their margins are getting slightly better as they do massive layoffs and raise their prices, but they're still hemorrhaging money.