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Do they still lose money on every ride they give? I've been skeptical for a while now, it's a ponzi scheme.

savanaly 5y ago
For the last time, not everything that's not everything that's a bad financial proposition == ponzi scheme. At what point have new drivers ever paid the wages of old drivers? Uber drivers have always done ok in the short term, new or old, it's Uber that loses money on every ride. And if the drivers are not coming out ahead long term due to maintenance costs, that's not affecting newer drivers any more than older drivers.
- bostonsre 5y ago
  I don't understand why you are going into driver wages. I'm completely fine with their drivers making good money, but if they lose money on every ride, it doesn't sound like a good business. What makes it a ponzi scheme is that the initial investors and the people that run it knew they couldn't possibly make money and yet they were able to get tons of investors to pour capital into a business that couldn't make money. New investors aka public markets paid out the old investors aka venture capitalists.
bogota 5y ago
Please explain what you think a ponzi scheme is. Because losing money on something isn’t close to the definition
- dktoao 5y ago
  I think they mean it is sort of a ponzi scheme for those invested. It requires more and more investor money to operate and will eventually collapse leaving the last round of investors holding the bag while those that got in early may get out fine. I think the ponzi scheme is more an apt metaphor than the actual structure of the company?
  - hervature 5y ago
    A Ponzi scheme requires an element of fraud. Very difficult to tell me that building a global fleet of ride hailing and being transparent with the financials is a Ponzi scheme. The outcome might be similar (later investors bearing most of the losses) but that's more of an investor problem and not fraud.
    - rovolo 5y ago
      They probably mean a Pyramid scheme. In regular use, Ponzi and Pyramid schemes are interchangeable terms because you need new money to stay afloat. Legally they're different because a Ponzi scheme requires lying about where the returns are coming from, but a Pyramid scheme can be entirely truthful about the finances.
      - randycupertino 5y ago
        It's more of a funnel system where they take investor $$ and channel that to employees and in discounts to customers.
      - Ekaros 5y ago
        Pyramid scheme is system where income is derived from recruitment of new investors. Ponzi scheme is centralized system where profits of old ones is paid with money of new ones. VC start-up burning money to make things or subsidise customers in attempt to acquire them is neither. I'm really starting to hate when these terms that have rather specific and well understood meanings are thrown at anything. If you want to call it something just say it is big scam. Scam really could be anything. Not specific thing.
    - bostonsre 5y ago
      It seems plausible that those leading the company thought there was no chance to turn a profit but we'll never really know. They have a vested interest in saying "everything is going great and the future looks great" no matter what.
  - Ekaros 5y ago
lhorie 5y ago
No, according to the latest report, rides have been profitable[0] (@ +544M in the last quarter). Deliveries are still in the red, but only barely (@ -12M, up from -183M from previous quarter). "Losses" largely come from G&A/R&D. [0] https://techcrunch.com/wp-content/uploads/2021/11/Screen-Shot-2021-11-04-at-4.18.11-PM.png https://techcrunch.com/wp-content/uploads/2021/11/Screen-Sho...
- Zanfa 5y ago
  That's just creative accounting. Uber actually incurred a $2B loss, but for some reason they insist on ignoring expenses when calculating their "profits".
  - quickthrowman 5y ago
    The loss last quarter was mostly ($2.5B) a mark-to-market write down of their stake in Didi, which they have not sold.
  - lhorie 5y ago
    The 2B "loss" was a downswing of Didi stock, which Uber has a big stake on; AFAIK Uber didn't actually liquidate that position, so it's more of a paper money loss. See [0] As for "creative accounting", pretty much everyone in this industry segment uses EBITDA. That's the language investors and media use to talk about earnings calls for not just Uber, but also Lyft, Doordash, etc. If you want to make a case for why GAP analysis would make more sense vs EBITDA given the maturity of the industry, I suppose a more elaborated argument is in order? [0] https://www.investopedia.com/terms/m/mark-to-market-losses.asp https://www.investopedia.com/terms/m/mark-to-market-losses.a...
    - ultraluminous 5y ago
      I agree with the gist of you're saying, and I didn't personally dig into their last few fillings, but I suppose what the parent comment is trying to express can also be stated as "Uber's core ride-sharing business model is not cash flow positive", which can be obfuscated when arguing GAP vs EBITDA.

For the last time, not everything that's not everything that's a bad financial proposition == ponzi scheme. At what point have new drivers ever paid the wages of old drivers? Uber drivers have always done ok in the short term, new or old, it's Uber that loses money on every ride. And if the drivers are not coming out ahead long term due to maintenance costs, that's not affecting newer drivers any more than older drivers.

bostonsre 5y ago
I don't understand why you are going into driver wages. I'm completely fine with their drivers making good money, but if they lose money on every ride, it doesn't sound like a good business. What makes it a ponzi scheme is that the initial investors and the people that run it knew they couldn't possibly make money and yet they were able to get tons of investors to pour capital into a business that couldn't make money. New investors aka public markets paid out the old investors aka venture capitalists.

bogota 5y ago

Please explain what you think a ponzi scheme is. Because losing money on something isn’t close to the definition

dktoao 5y ago
I think they mean it is sort of a ponzi scheme for those invested. It requires more and more investor money to operate and will eventually collapse leaving the last round of investors holding the bag while those that got in early may get out fine. I think the ponzi scheme is more an apt metaphor than the actual structure of the company?
- hervature 5y ago
  A Ponzi scheme requires an element of fraud. Very difficult to tell me that building a global fleet of ride hailing and being transparent with the financials is a Ponzi scheme. The outcome might be similar (later investors bearing most of the losses) but that's more of an investor problem and not fraud.
  - rovolo 5y ago
    They probably mean a Pyramid scheme. In regular use, Ponzi and Pyramid schemes are interchangeable terms because you need new money to stay afloat. Legally they're different because a Ponzi scheme requires lying about where the returns are coming from, but a Pyramid scheme can be entirely truthful about the finances.
    - randycupertino 5y ago
      It's more of a funnel system where they take investor $$ and channel that to employees and in discounts to customers.
    - Ekaros 5y ago
      Pyramid scheme is system where income is derived from recruitment of new investors. Ponzi scheme is centralized system where profits of old ones is paid with money of new ones. VC start-up burning money to make things or subsidise customers in attempt to acquire them is neither. I'm really starting to hate when these terms that have rather specific and well understood meanings are thrown at anything. If you want to call it something just say it is big scam. Scam really could be anything. Not specific thing.
  - bostonsre 5y ago
    It seems plausible that those leading the company thought there was no chance to turn a profit but we'll never really know. They have a vested interest in saying "everything is going great and the future looks great" no matter what.
- Ekaros 5y ago

lhorie 5y ago

No, according to the latest report, rides have been profitable[0] (@ +544M in the last quarter). Deliveries are still in the red, but only barely (@ -12M, up from -183M from previous quarter). "Losses" largely come from G&A/R&D. [0] https://techcrunch.com/wp-content/uploads/2021/11/Screen-Shot-2021-11-04-at-4.18.11-PM.png https://techcrunch.com/wp-content/uploads/2021/11/Screen-Sho...

Zanfa 5y ago
That's just creative accounting. Uber actually incurred a $2B loss, but for some reason they insist on ignoring expenses when calculating their "profits".
- quickthrowman 5y ago
  The loss last quarter was mostly ($2.5B) a mark-to-market write down of their stake in Didi, which they have not sold.
- lhorie 5y ago
  The 2B "loss" was a downswing of Didi stock, which Uber has a big stake on; AFAIK Uber didn't actually liquidate that position, so it's more of a paper money loss. See [0] As for "creative accounting", pretty much everyone in this industry segment uses EBITDA. That's the language investors and media use to talk about earnings calls for not just Uber, but also Lyft, Doordash, etc. If you want to make a case for why GAP analysis would make more sense vs EBITDA given the maturity of the industry, I suppose a more elaborated argument is in order? [0] https://www.investopedia.com/terms/m/mark-to-market-losses.asp https://www.investopedia.com/terms/m/mark-to-market-losses.a...
  - ultraluminous 5y ago
    I agree with the gist of you're saying, and I didn't personally dig into their last few fillings, but I suppose what the parent comment is trying to express can also be stated as "Uber's core ride-sharing business model is not cash flow positive", which can be obfuscated when arguing GAP vs EBITDA.