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I am not trying to bash Uber, but statements like: >>Also, Rides had already reached profitability at Uber (pre-covid). Need to be taken with a grain of salt.

I am not trying to bash Uber, but statements like: >>Also, Rides had already reached profitability at Uber (pre-covid). Need to be taken with a grain of salt. There are so many ways to game accounting in general, and even more ways to game the accounting of business unit. So when they say Rides is profitable, it may be true, or close enough to be true to be so. But you should doubt. If a company has $14b in revenue and $8b in losses (2019) and a profitable unit like Rides. That means some other part of the company is lost $8b+. I am sure they spend a lot on delivery, and self driving cars, but do they spend that much. The reply to this will be "that involved a one time write down.." or some such. But when a company has never turned a profit, its hard to tell when the one time costs will stop. That said, I believe there is a viable business in Uber. It has just been overvalued.

pembrook 6y ago
All companies use accounting to paint the picture they want for investors. The point is, ridesharing is a viable business. There are numerous profitable companies in Europe and Asia doing the same thing as Uber.
- labcomputer 6y ago
  Others may be profitable, but I'm skeptical that Uber is. If you talk to many drivers, you'll find a common theme that "bonuses" make up a substantial fraction of their overall income (bonuses are things like "Drive XX rides in a week and get $YYY"). To my understanding, most/all of these bonuses are placed under the accounting budget (under the premise that these bonuses are intended to bring new drivers onto the platform), not the rideshare budget. So rideshare cost of operations doesn't properly reflect the true cost of operating the rideshare business, which means that unit economics are worse than they appear in Uber's reporting (possibly even negative).
- georgeecollins 6y ago
  I agree it is a viable business, but they still may not be charging enough for it to be profitable. If they need to charge more, growth may slow or reverse.
- aeturnum 6y ago
  > There are numerous profitable companies in Europe and Asia doing the same thing as Uber. How can Uber be doing the same thing if Uber is losing money doing the thing and the other companies make money doing it? Even if one or more sections of Uber are profitable, it's likely that those sections rely on functions performed by unprofitable sections of the company. Disentangling those elements isn't simple. It's possible that Uber as-it-exists-now can never transition to profitability but a company-like-Uber-in-some-ways could be profitable in the future.
  - ghaff 6y ago
    >but a company-like-Uber-in-some-ways could be profitable in the future In a sufficiently dense area, there is clearly a market for app-summoned taxis (for various values of who owns/maintains/pays for said cab). Prices may be higher than today's rideshare and volume lower. But there's a market for it. Just probably in fewer areas/at fewer times/with more expensive rates than today.
    - Udik 6y ago
      > In a sufficiently dense area, there is clearly a market for app-summoned taxis (for various values of who owns/maintains/pays for said cab) Oh well. For sure, but it's a pretty vague statement, isn't it? We're not talking about some modest value that can keep some small company running; we're talking about $75 billion value. I'm sure that not one, but many small companies can thrive providing local services to taxi drivers collecting and dispatching hails. But that's a far cry from that to a single global company valued at almost a hundred billion dollars.
- TAForObvReasons 6y ago
  There's a huge gap between "the economics of ridesharing are not obviously unprofitable" and "the economics of ridesharing justifies the valuation implied by the investments in uber lyft etc".

pembrook 6y ago

All companies use accounting to paint the picture they want for investors. The point is, ridesharing is a viable business. There are numerous profitable companies in Europe and Asia doing the same thing as Uber.

labcomputer 6y ago
Others may be profitable, but I'm skeptical that Uber is. If you talk to many drivers, you'll find a common theme that "bonuses" make up a substantial fraction of their overall income (bonuses are things like "Drive XX rides in a week and get $YYY"). To my understanding, most/all of these bonuses are placed under the accounting budget (under the premise that these bonuses are intended to bring new drivers onto the platform), not the rideshare budget. So rideshare cost of operations doesn't properly reflect the true cost of operating the rideshare business, which means that unit economics are worse than they appear in Uber's reporting (possibly even negative).
georgeecollins 6y ago
I agree it is a viable business, but they still may not be charging enough for it to be profitable. If they need to charge more, growth may slow or reverse.
aeturnum 6y ago
> There are numerous profitable companies in Europe and Asia doing the same thing as Uber. How can Uber be doing the same thing if Uber is losing money doing the thing and the other companies make money doing it? Even if one or more sections of Uber are profitable, it's likely that those sections rely on functions performed by unprofitable sections of the company. Disentangling those elements isn't simple. It's possible that Uber as-it-exists-now can never transition to profitability but a company-like-Uber-in-some-ways could be profitable in the future.
- ghaff 6y ago
  >but a company-like-Uber-in-some-ways could be profitable in the future In a sufficiently dense area, there is clearly a market for app-summoned taxis (for various values of who owns/maintains/pays for said cab). Prices may be higher than today's rideshare and volume lower. But there's a market for it. Just probably in fewer areas/at fewer times/with more expensive rates than today.
  - Udik 6y ago
    > In a sufficiently dense area, there is clearly a market for app-summoned taxis (for various values of who owns/maintains/pays for said cab) Oh well. For sure, but it's a pretty vague statement, isn't it? We're not talking about some modest value that can keep some small company running; we're talking about $75 billion value. I'm sure that not one, but many small companies can thrive providing local services to taxi drivers collecting and dispatching hails. But that's a far cry from that to a single global company valued at almost a hundred billion dollars.
TAForObvReasons 6y ago
There's a huge gap between "the economics of ridesharing are not obviously unprofitable" and "the economics of ridesharing justifies the valuation implied by the investments in uber lyft etc".