11 ms·

Uber loses $2.9B, offloads bike and scooter business

165 points by finphil 6y ago

romwell 6y ago
Best of luck to anyone working for Uber in these times.
camjohnson26 6y ago
I doubt many of Uber’s casual users understand how insanely unprofitable the current business model is. 2.9 billion is 3 unicorns. Even before COVID they’ve been losing something on the order of a billion a year. It’ll be interesting to see if they can turn this around.
- eralps 6y ago
  I wonder what it takes to take down Uber and alike. These companies keep losing money but still going on. Is it possible that they pivot the whole business to Uber Eats only?
  - rossdavidh 6y ago
    ...or "pivot" to selling themselves to GM or Avis or some taxicab company, at pennies on the dollar?
- criddell 6y ago
  What would qualify as a turn around? If three years from now they are a $50 million company that's profitable, would that work?
  - redorb 6y ago
    I don't think so. Being a 50mm company probably includes no longer serving the majority of markets they do now. At 50mm they become a regional taxi service with phone hailing rides. Truth is - now that they are public ~ I'm not sure what success is... for a lot of people who started there a long time ago - the IPO was 'the success' now the public is left holding the bag (mostly by their own choice of buying the stock).
    - sg47 6y ago
      I think they meant $50 million in profit.
      - criddell 6y ago
        No, I was talking market cap. That's the size of some nation-wide retailers (like J.C. Penney). I think Uber can exist, I just don't see how what they do is worth billions. When Uber withdrew from Austin, it took a couple of days for very similar replacements to pop up.
- gberger 6y ago
  > 2.9 billion is 3 unicorns. Hmm, unicorns are usually defined by $1B valuation, while the number of $2.9B in loss is related to revenue. So I think the comparison doesn't hold, it's apples to oranges.
  - lucasmullens 6y ago
    Seems like a fair comparison, they could have acquired 3 unicorn companies with that money.
    - gberger 6y ago
      Good point
    - FabHK 6y ago
      Per year. (Comparisons involving both stock and flow measures are somewhat dodgy, but they’re made all the time (debt/GDP, annual rent/house price, unicorns/revenue)). Edit to add: they’re not really dodgy per se, but the result is a rate, ie has a time dimension.
Ericson2314 6y ago
I'd rather rent a bike or scooter right now than get in a stranger's car. I don't get it.
- jeffbee 6y ago
  Yes, but how much will you pay? Bike rental like Jump or Lyft hasn't ever been profitable, nor should it be. It should be viewed by cities as a way to manage their street capacity, and like bus service, should not be expected to be internally profitable. This was the model of Motivate (Citibike, Bay Area Bike Share) before Lyft acquired them.
  - Ericson2314 6y ago
    I agree completely to that principle. I guess read what I wrote as for-profit car rental sounds stupider than for-profit bike rental in these times. Still a weird call for Uber which must lie to itself about the potential for profit.
- aeyes 6y ago
  At least here none of the bike or scooter rental services are currently working. Jump in the Uber app only shows "We will be pausing Jump in your city."
deminature 6y ago
"Net loss attributable to Uber Technologies, Inc. of $2.9 billion, which includes $277 million in stock-based compensation expense and pre-tax impairment write-downs of $2.1 billion. Net loss attributable to Uber Technologies, Inc. excluding the impairment write-downs, net of the tax benefit would have been $1.1 billion." So a loss of $1.1bn is an improvement on $1.4 last quarter, not including write-downs associated with investments in Didi and Grab. This explains why the stock went up not down after earnings. >https://www.marketwatch.com/press-release/uber-plows-forward-despite-loss-2020-05-08 https://www.marketwatch.com/press-release/uber-plows-forward...
- clairity 6y ago
  you shouldn't ignore impairment. it's a place to stuff a bunch of bad decisions, and an amorphous bucket where value can be plausibly inflated and deflated to control the performance story of a company (i.e., where fraud can happen).
  - deleted 6y ago
    [deleted]
  - valuearb 6y ago
    This is all true, but it can also be a place to acknowledge the bad decisions Kalinack made. When you have a grab bag collection of growth businesses like Uber, the important question is whether the core business can be profitable, and to that end you need to exclude the failures of the non core businesses.
    - lumost 6y ago
      isn't uber still priced as if they had grown to be a profitable business across all of their growth businesses? I have a hard time understanding the valuation of Uber given any negative indications on any of their businesses.
  - sceptical 6y ago
    In this particular case it is mainly the value of the investments in DiDi, Yandex.Taxi and Grab. Once those will bounce back, Uber will have a very profitable quarter. Of course then it will be ignored as just increased value of investments.
troughway 6y ago
Uber never had $2.9B to lose.
- suyash 6y ago
  The article says "Uber brought in $3.54 billion in revenue in the first quarter, up 14% from the same time last year." so they did and more than last year before incurring loss.
  - deleted 6y ago
    [deleted]
xiaolingxiao 6y ago
Could someone w/ an understanding of accounting add to this report? Uber is "offloading" bike/scooter business to Lime, but also making an investment in Lime... is this just a way to hide losses? Essentially paying Lime to take the red off Uber's balance sheet, while maintaining an option in the micromobility market?
- rossdavidh 6y ago
  IANAAccountant, but I think the investment was in the past, and this announcement is that they are ditching the investment. But I could be reading that wrong.
  - blackswan101 6y ago
    https://www.bloomberg.com/news/articles/2020-05-07/uber-leads-170-million-investment-into-lime-electric-scooters https://www.bloomberg.com/news/articles/2020-05-07/uber-lead...
- Jommi 6y ago
  They are refocusing on what's their core business. They found out that they're too late to the scooter game and just thought best to be a platform where other providers compete
- mxschumacher 6y ago
  They are swapping equity. Uber exchanges its ownership of jump against shares of lime. It's a common operation and uber has done it many times. It's not directly tied to losses, because the value of the transaction is based on the operational performance of both businesses. It's not shady.
- lmm 6y ago
  It doesn't offload their losses. It offloads their risk, since the Lime investment can't go below zero, but that's genuine and not just accounting (if Lime goes bankrupt, Uber is not on the hook for it). Buying and selling in stock is normal and legitimate, particularly in times like these where a valuation of Jump in terms of Lime shares is probably a lot more stable than a valuation of Jump in terms of cash.
martythemaniak 6y ago
First, they were gonna make the jump to be an autonomous robotaxi service, but that's going nowhere fast. Then they were going to be mobility service - cars, bikes, scooters, everything would go through them. But no more. So what are they going to be now? Just milk their taxi service until Waymo, Tesla or whoever comes and wipes them off the market? Honestly, what are their long-term prospects? I've been staying away from Uber stock because they have a market cap of 50B. They're not going to be paying dividends, so what's going to make them be a 100-200B company?
- gffrd 6y ago
  This is what I want to know. Ridesharing fares are obviously underpriced … and if they were raised 30% to make them sustainable, it becomes "not worth it" for a good chunk of people who use ridesharing as a supplement to car, bus, transit, etc. I assume the strategy is a long-play to have people + communities become wholly dependent on your services (they skip buying cars, skip learning to drive, transit fails to evolve further), then once they are, ratchet up the prices? It's just that you have to clear that point first, otherwise :pile of burning cash emoji:
  - subsubzero 6y ago
    I think Uber is a lost cause, sorry to say but the food delivery business cannot be profitable for a majority of customers to where they will still pay for takeout. Their ATS service(self driving cars etc) was using stolen technology from waymo, now they are forced to using their own technologies they are way behind waymo, aurora, nuro, etc. Even ride hailing which is supposed to be their bread and butter is losing money, trying to up the ride costs and expect a huge drop in riders. Lastly Covid-19 joined the party, nobody wants to ride in a strangers car who could be infected (or visa-versa). This mindset of fear of the virus could take a year or so to subside, by then how much money will they have burnt?
    - rob_austin 6y ago
      The worst part is consumers have also lost because of uber. The promise of convenient, affordable transportation will not be delivered. Uber/Lyft rides will be more expensive than cab rides were because users have to support Uber's overhead.
klmadfejno 6y ago
> The challenges are continuing in the second quarter. In April, rides were down 80% globally compared to last year, Khosrowshahi said. But rides have been increasing for the past three weeks and bookings in large cities across Georgia and Texas, two states that started re-opening, are up 43% and 50% respectively from their lowest points, he said. This isn't exactly what he said, but 1 * (1-0.80) * 1.43 is... -72% from the original.
- MengerSponge 6y ago
  I mean, an 80% loss isn't good, but a 400% gain is pretty excellent. Growth like that is how you get to the moon!
  - klmadfejno 6y ago
    Where is 400% coming from?
    - bmm6o 6y ago
      The joke is if you drop 80% and later increase 400%, you're back where you started.
linuxftw 6y ago
The problem with the bike and scooter rental businesses is they're unable to offload the maintenance burden to someone else like the car business. Uber thought it was a good transportation business. It was wrong. It's a good market maker, and a good middle-man. Ebay? Middle-man. All retailers? Middle-man. Pay Pal? Middle-man. Find out how to be the middle-man.
warent 6y ago
Can anyone explain why Lyft is not experiencing the same pain? I've always used them over Uber (not an investor in either, just a customer) and now as much as ever Lyft just seems to be a smarter, more mature company.
- filmgirlcw 6y ago
  But they are? Lyft laid off 17% of its staff the other day, despite promising no layoffs weeks ago [1]. Lyft doesn’t have Uber’s exposure in other business sectors like food delivery or scooters (a sector it actually exited in November), and it doesn’t have Uber’s global business (for better or for worse — it could be better now but be worse if other parts of the world recover before the US), but I would hardly call it the “smarter, more mature company.” This sector is in trouble, period. Lyft is the smaller player. That could work to their advantage or not — but I would say both companies are experiencing the same pain and are equally troubled. [1]: https://www.businessinsider.com/laid-off-lyft-employees-describe-how-the-process-was-handled-2020-5 https://www.businessinsider.com/laid-off-lyft-employees-desc...
  - ceras 6y ago
    Quick correction: Lyft continues to operate scooters (as well as bikeshare), e.g. see this recent program: https://www.lyft.com/blog/posts/LyftUp-Scooter-Critical-Workforce-Program https://www.lyft.com/blog/posts/LyftUp-Scooter-Critical-Work...
- SilasX 6y ago
  I thought Lyft's pain was pretty similar. They had about the same percentage layoffs: https://news.ycombinator.com/item?id=23020812 https://news.ycombinator.com/item?id=23020812 And reduced internship salaries: https://news.ycombinator.com/item?id=23047687 https://news.ycombinator.com/item?id=23047687 Although from searching the recent news it does look like they've seen some good news as well, like a share price rally after the Q1 report: https://news.ycombinator.com/item?id=23095844 https://news.ycombinator.com/item?id=23095844 So Lyft got hit hard, but probably less so because they have fewer quixotic sub-ventures than Uber.
autokad 6y ago
I feel sorry of what happened to Jump. They had a good product, but Uber bought them and now when they wanted to make their income look pretty while 'protecting their lime investment', they gutted Jump and handed the carcass to lime.
thrower123 6y ago
Didn't they just buy another scooter company days ago?
- TaylorGood 6y ago
  I read that same headline yesterday: Uber leads $170 million investment in scooter company Lime. Wtf? https://www.cnbc.com/2020/05/07/uber-leads-170-million-investment-in-scooter-company-lime.html https://www.cnbc.com/2020/05/07/uber-leads-170-million-inves...
okareaman 6y ago
Uber has another problem I haven't seen mentioned. Many drivers have quit (for fear of getting sick I presume.) I know this because I drive for them (I like it) and the number of long drives to do a pickup for a short ride is way up, indicating there are no drivers nearby. I'm not going to drive 25 minutes to make $5, so I decline and the customer doesn't get a ride, I assume. If Uber wants drivers to come back they need to do more for driver safety. A really high quality mask would be a start.
diogenescynic 6y ago
I wonder what will happen with all their e-bikes? I wonder if they will resell them?

165 points by finphil 6y ago

Best of luck to anyone working for Uber in these times.

I doubt many of Uber’s casual users understand how insanely unprofitable the current business model is. 2.9 billion is 3 unicorns. Even before COVID they’ve been losing something on the order of a billion a year. It’ll be interesting to see if they can turn this around.

eralps 6y ago
I wonder what it takes to take down Uber and alike. These companies keep losing money but still going on. Is it possible that they pivot the whole business to Uber Eats only?
- rossdavidh 6y ago
  ...or "pivot" to selling themselves to GM or Avis or some taxicab company, at pennies on the dollar?
criddell 6y ago
What would qualify as a turn around? If three years from now they are a $50 million company that's profitable, would that work?
- redorb 6y ago
  I don't think so. Being a 50mm company probably includes no longer serving the majority of markets they do now. At 50mm they become a regional taxi service with phone hailing rides. Truth is - now that they are public ~ I'm not sure what success is... for a lot of people who started there a long time ago - the IPO was 'the success' now the public is left holding the bag (mostly by their own choice of buying the stock).
  - sg47 6y ago
    I think they meant $50 million in profit.
    - criddell 6y ago
      No, I was talking market cap. That's the size of some nation-wide retailers (like J.C. Penney). I think Uber can exist, I just don't see how what they do is worth billions. When Uber withdrew from Austin, it took a couple of days for very similar replacements to pop up.
gberger 6y ago
> 2.9 billion is 3 unicorns. Hmm, unicorns are usually defined by $1B valuation, while the number of $2.9B in loss is related to revenue. So I think the comparison doesn't hold, it's apples to oranges.
- lucasmullens 6y ago
  Seems like a fair comparison, they could have acquired 3 unicorn companies with that money.
  - gberger 6y ago
    Good point
  - FabHK 6y ago
    Per year. (Comparisons involving both stock and flow measures are somewhat dodgy, but they’re made all the time (debt/GDP, annual rent/house price, unicorns/revenue)). Edit to add: they’re not really dodgy per se, but the result is a rate, ie has a time dimension.

Ericson2314 6y ago

I'd rather rent a bike or scooter right now than get in a stranger's car. I don't get it.

jeffbee 6y ago
Yes, but how much will you pay? Bike rental like Jump or Lyft hasn't ever been profitable, nor should it be. It should be viewed by cities as a way to manage their street capacity, and like bus service, should not be expected to be internally profitable. This was the model of Motivate (Citibike, Bay Area Bike Share) before Lyft acquired them.
- Ericson2314 6y ago
  I agree completely to that principle. I guess read what I wrote as for-profit car rental sounds stupider than for-profit bike rental in these times. Still a weird call for Uber which must lie to itself about the potential for profit.
aeyes 6y ago
At least here none of the bike or scooter rental services are currently working. Jump in the Uber app only shows "We will be pausing Jump in your city."

deminature 6y ago

"Net loss attributable to Uber Technologies, Inc. of $2.9 billion, which includes $277 million in stock-based compensation expense and pre-tax impairment write-downs of $2.1 billion. Net loss attributable to Uber Technologies, Inc. excluding the impairment write-downs, net of the tax benefit would have been $1.1 billion." So a loss of $1.1bn is an improvement on $1.4 last quarter, not including write-downs associated with investments in Didi and Grab. This explains why the stock went up not down after earnings. >https://www.marketwatch.com/press-release/uber-plows-forward-despite-loss-2020-05-08 https://www.marketwatch.com/press-release/uber-plows-forward...

clairity 6y ago
you shouldn't ignore impairment. it's a place to stuff a bunch of bad decisions, and an amorphous bucket where value can be plausibly inflated and deflated to control the performance story of a company (i.e., where fraud can happen).
- deleted 6y ago
  [deleted]
- valuearb 6y ago
  This is all true, but it can also be a place to acknowledge the bad decisions Kalinack made. When you have a grab bag collection of growth businesses like Uber, the important question is whether the core business can be profitable, and to that end you need to exclude the failures of the non core businesses.
  - lumost 6y ago
    isn't uber still priced as if they had grown to be a profitable business across all of their growth businesses? I have a hard time understanding the valuation of Uber given any negative indications on any of their businesses.
- sceptical 6y ago
  In this particular case it is mainly the value of the investments in DiDi, Yandex.Taxi and Grab. Once those will bounce back, Uber will have a very profitable quarter. Of course then it will be ignored as just increased value of investments.

troughway 6y ago

Uber never had $2.9B to lose.

suyash 6y ago
The article says "Uber brought in $3.54 billion in revenue in the first quarter, up 14% from the same time last year." so they did and more than last year before incurring loss.
- deleted 6y ago
  [deleted]

xiaolingxiao 6y ago

Could someone w/ an understanding of accounting add to this report? Uber is "offloading" bike/scooter business to Lime, but also making an investment in Lime... is this just a way to hide losses? Essentially paying Lime to take the red off Uber's balance sheet, while maintaining an option in the micromobility market?

rossdavidh 6y ago
IANAAccountant, but I think the investment was in the past, and this announcement is that they are ditching the investment. But I could be reading that wrong.
- blackswan101 6y ago
  https://www.bloomberg.com/news/articles/2020-05-07/uber-leads-170-million-investment-into-lime-electric-scooters https://www.bloomberg.com/news/articles/2020-05-07/uber-lead...
Jommi 6y ago
They are refocusing on what's their core business. They found out that they're too late to the scooter game and just thought best to be a platform where other providers compete
mxschumacher 6y ago
They are swapping equity. Uber exchanges its ownership of jump against shares of lime. It's a common operation and uber has done it many times. It's not directly tied to losses, because the value of the transaction is based on the operational performance of both businesses. It's not shady.
lmm 6y ago
It doesn't offload their losses. It offloads their risk, since the Lime investment can't go below zero, but that's genuine and not just accounting (if Lime goes bankrupt, Uber is not on the hook for it). Buying and selling in stock is normal and legitimate, particularly in times like these where a valuation of Jump in terms of Lime shares is probably a lot more stable than a valuation of Jump in terms of cash.

martythemaniak 6y ago

First, they were gonna make the jump to be an autonomous robotaxi service, but that's going nowhere fast. Then they were going to be mobility service - cars, bikes, scooters, everything would go through them. But no more. So what are they going to be now? Just milk their taxi service until Waymo, Tesla or whoever comes and wipes them off the market? Honestly, what are their long-term prospects? I've been staying away from Uber stock because they have a market cap of 50B. They're not going to be paying dividends, so what's going to make them be a 100-200B company?

gffrd 6y ago
This is what I want to know. Ridesharing fares are obviously underpriced … and if they were raised 30% to make them sustainable, it becomes "not worth it" for a good chunk of people who use ridesharing as a supplement to car, bus, transit, etc. I assume the strategy is a long-play to have people + communities become wholly dependent on your services (they skip buying cars, skip learning to drive, transit fails to evolve further), then once they are, ratchet up the prices? It's just that you have to clear that point first, otherwise :pile of burning cash emoji:
- subsubzero 6y ago
  I think Uber is a lost cause, sorry to say but the food delivery business cannot be profitable for a majority of customers to where they will still pay for takeout. Their ATS service(self driving cars etc) was using stolen technology from waymo, now they are forced to using their own technologies they are way behind waymo, aurora, nuro, etc. Even ride hailing which is supposed to be their bread and butter is losing money, trying to up the ride costs and expect a huge drop in riders. Lastly Covid-19 joined the party, nobody wants to ride in a strangers car who could be infected (or visa-versa). This mindset of fear of the virus could take a year or so to subside, by then how much money will they have burnt?
  - rob_austin 6y ago
    The worst part is consumers have also lost because of uber. The promise of convenient, affordable transportation will not be delivered. Uber/Lyft rides will be more expensive than cab rides were because users have to support Uber's overhead.

klmadfejno 6y ago

> The challenges are continuing in the second quarter. In April, rides were down 80% globally compared to last year, Khosrowshahi said. But rides have been increasing for the past three weeks and bookings in large cities across Georgia and Texas, two states that started re-opening, are up 43% and 50% respectively from their lowest points, he said. This isn't exactly what he said, but 1 * (1-0.80) * 1.43 is... -72% from the original.

MengerSponge 6y ago
I mean, an 80% loss isn't good, but a 400% gain is pretty excellent. Growth like that is how you get to the moon!
- klmadfejno 6y ago
  Where is 400% coming from?
  - bmm6o 6y ago
    The joke is if you drop 80% and later increase 400%, you're back where you started.

linuxftw 6y ago

The problem with the bike and scooter rental businesses is they're unable to offload the maintenance burden to someone else like the car business. Uber thought it was a good transportation business. It was wrong. It's a good market maker, and a good middle-man. Ebay? Middle-man. All retailers? Middle-man. Pay Pal? Middle-man. Find out how to be the middle-man.

warent 6y ago

Can anyone explain why Lyft is not experiencing the same pain? I've always used them over Uber (not an investor in either, just a customer) and now as much as ever Lyft just seems to be a smarter, more mature company.

filmgirlcw 6y ago
But they are? Lyft laid off 17% of its staff the other day, despite promising no layoffs weeks ago [1]. Lyft doesn’t have Uber’s exposure in other business sectors like food delivery or scooters (a sector it actually exited in November), and it doesn’t have Uber’s global business (for better or for worse — it could be better now but be worse if other parts of the world recover before the US), but I would hardly call it the “smarter, more mature company.” This sector is in trouble, period. Lyft is the smaller player. That could work to their advantage or not — but I would say both companies are experiencing the same pain and are equally troubled. [1]: https://www.businessinsider.com/laid-off-lyft-employees-describe-how-the-process-was-handled-2020-5 https://www.businessinsider.com/laid-off-lyft-employees-desc...
- ceras 6y ago
  Quick correction: Lyft continues to operate scooters (as well as bikeshare), e.g. see this recent program: https://www.lyft.com/blog/posts/LyftUp-Scooter-Critical-Workforce-Program https://www.lyft.com/blog/posts/LyftUp-Scooter-Critical-Work...
SilasX 6y ago
I thought Lyft's pain was pretty similar. They had about the same percentage layoffs: https://news.ycombinator.com/item?id=23020812 https://news.ycombinator.com/item?id=23020812 And reduced internship salaries: https://news.ycombinator.com/item?id=23047687 https://news.ycombinator.com/item?id=23047687 Although from searching the recent news it does look like they've seen some good news as well, like a share price rally after the Q1 report: https://news.ycombinator.com/item?id=23095844 https://news.ycombinator.com/item?id=23095844 So Lyft got hit hard, but probably less so because they have fewer quixotic sub-ventures than Uber.

autokad 6y ago

I feel sorry of what happened to Jump. They had a good product, but Uber bought them and now when they wanted to make their income look pretty while 'protecting their lime investment', they gutted Jump and handed the carcass to lime.

thrower123 6y ago

Didn't they just buy another scooter company days ago?

TaylorGood 6y ago
I read that same headline yesterday: Uber leads $170 million investment in scooter company Lime. Wtf? https://www.cnbc.com/2020/05/07/uber-leads-170-million-investment-in-scooter-company-lime.html https://www.cnbc.com/2020/05/07/uber-leads-170-million-inves...

okareaman 6y ago

Uber has another problem I haven't seen mentioned. Many drivers have quit (for fear of getting sick I presume.) I know this because I drive for them (I like it) and the number of long drives to do a pickup for a short ride is way up, indicating there are no drivers nearby. I'm not going to drive 25 minutes to make $5, so I decline and the customer doesn't get a ride, I assume. If Uber wants drivers to come back they need to do more for driver safety. A really high quality mask would be a start.

diogenescynic 6y ago

I wonder what will happen with all their e-bikes? I wonder if they will resell them?