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> What they don't talk about is that their "more convenient taxi" ride is heavily subsidized by VC money This meme really needs to die. Uber did burn VC cash e

by lhorie 5y ago

> What they don't talk about is that their "more convenient taxi" ride is heavily subsidized by VC money This meme really needs to die. Uber did burn VC cash earlier on, especially in places w/ intense competition (e.g. vs Didi in China), but that's not an accurate portrayal of the company anymore. Uber has been a public company for like 3 years now, and they actually posted a profit on adjusted ebitda basis on Q3 last year (with a promise for a larger profit for Q4). The Uber-is-cheaper thing isn't an accurate premise these days either. There have been numerous articles of people complaining about high airport trip fares due to the mismatch between demand and supply curves due to covid lockdowns/reopenings. There were also price hikes in two key markets (SF and LA) partly due to regulation.

disgruntledphd2 5y ago
> https://techcrunch.com/2021/11/04/uber-squeaks-tiny-adjusted-profit-in-q3-despite-2-4b-net-loss/ https://techcrunch.com/2021/11/04/uber-squeaks-tiny-adjusted... This suggests that on GAAP metrics, they lost $1.28 a share. Doesn't sound like they're making money.
- lhorie 5y ago
  Yeah, that's why I qualified by saying it's on adjusted ebitda. The ridesharing industry doesn't use GAP yet under the argument it's still a nascent industry, so the narrative right now mostly centers around showing a trend towards actual profitability quarter after quarter (as opposed to this narrative that 1B+ losses are still somehow just being masked by VC cash injections of equal weight). The being public thing is especially important since it basically means these companies (Uber, Lyft, Grab, Didi, etc) can't rely on cute accounting tricks. It's kinda do or die before the runway ends.
  - disgruntledphd2 5y ago
    Fundamentally, either IPO proceeds or remains of VC money (or debt) are funding Uber, as they're not broke yet.
    - lhorie 5y ago
      Well, it did post 4.8B revenue in Q3, so obviously that also funds a good chunk of operations.
      - disgruntledphd2 5y ago
        While losing an additional 2.8bn. That's what I mean, they have a net loss, which means that they need money from somewhere else to sustain themselves over time.
        lhorie 5y ago
        If you're talking about the Q3 net loss figure, I already mentioned downthread that a good chunk of it was due to the Didi stake write-off. This is kinda why I mentioned the rideshare industry talks so much about ebitda; the equity side is so leveraged and volatile that it overshadows the operations numbers at this point, despite not actually having all that much impact in day-to-day operations.
        disgruntledphd2 5y ago
        Point me to a quarter where they have made a GAAP profit, please. Like, I've been bearish on Uber for a long time now, but would be happy to be proved wrong.
        lhorie 5y ago
        I mean, we already went over this, i.e. there isn't such a quarter on record, if that's the only metric you're looking at. At least from what I've seen, many analysts are bullish right now (mostly due to a combo of low stock price, growth momentum in hedged verticals and scale of operations). Another data point is Doordash; some have pointed out that Uber eats' volume is bigger than DD, yet that isn't reflecting in the stock price (i.e. they think uber is undervalued considering the trajectory of profit in uber's delivery segment) Disclaimer: I've been keeping a pretty close eye on uber because I have a fairly sizable stock position. My intention here isn't to shill or cheerlead or whatever. Obviously, take whatever I say with a grain of salt, do your own research, etc.
  - mdoms 5y ago
    > adjusted ebitda You can just say "fake".
Zanfa 5y ago
Uber has lost roughly $25 billion dollars to date, so any talk of profitability is ridiculous, even if you believe their “adjusted-EBITDA” numbers which simply ignore hundreds of millions in expenses in their last quarter.
redsparrow 5y ago
In the linked transcript Doctorow suggests that Uber's profits come from selling off divisions. "I’m finally curing my starvation by eating my own arms" is the rather colourful metaphor he uses. Does that line up with the 2021Q3 profit you mention, or maybe he's talking about something that happened earlier?
- lhorie 5y ago
  There were some boosts to some numbers in some quarter from sale of divisions (the self-driving division acquisition by Aurora being one of the bigger one) yes, and there were also some boosts from pulling out of some markets (e.g. the Grab deal) but conversely, the timing of the Didi stake write-off in Q3 also put a negative dent in the metrics for that quarter. IMHO, those are purely paper equity numbers and don't represent the state of core operations at all. The implication to bottom line, though, is that these division were bleeding cash and the path to positive ROI was dubious, so they had to go. If you're gonna go w/ an arm-eating metaphor, I think an appendicitis might be a closer metaphor to the real story. Regardless of equity-related stuff, the Q3 report did specifically state that the rides division were in the green for the first time ever (on adjusted ebitda basis), with eats posting a near-break-even loss. The point isn't so much about where exactly the "green" line stands (whether it's adjusted ebitda basis, regular ebitda basis or GAP), but that the data points have been going up (and rather aggressively, according to some). This is supposed to suggest that operations are no longer bleeding cash mindlessly and actually working towards optimizing expenses etc.
  - redsparrow 5y ago
    Interesting, thanks for the detailed response. It's fun to listen to Doctorow talk trash but a lot of details get lost in the process. It will be interesting to see what Uber can do with the position they're in.

by lhorie 5y ago

disgruntledphd2 5y ago

> https://techcrunch.com/2021/11/04/uber-squeaks-tiny-adjusted-profit-in-q3-despite-2-4b-net-loss/ https://techcrunch.com/2021/11/04/uber-squeaks-tiny-adjusted... This suggests that on GAAP metrics, they lost $1.28 a share. Doesn't sound like they're making money.

lhorie 5y ago
Yeah, that's why I qualified by saying it's on adjusted ebitda. The ridesharing industry doesn't use GAP yet under the argument it's still a nascent industry, so the narrative right now mostly centers around showing a trend towards actual profitability quarter after quarter (as opposed to this narrative that 1B+ losses are still somehow just being masked by VC cash injections of equal weight). The being public thing is especially important since it basically means these companies (Uber, Lyft, Grab, Didi, etc) can't rely on cute accounting tricks. It's kinda do or die before the runway ends.
- disgruntledphd2 5y ago
  Fundamentally, either IPO proceeds or remains of VC money (or debt) are funding Uber, as they're not broke yet.
  - lhorie 5y ago
    Well, it did post 4.8B revenue in Q3, so obviously that also funds a good chunk of operations.
    - disgruntledphd2 5y ago
      While losing an additional 2.8bn. That's what I mean, they have a net loss, which means that they need money from somewhere else to sustain themselves over time.
      - lhorie 5y ago
        If you're talking about the Q3 net loss figure, I already mentioned downthread that a good chunk of it was due to the Didi stake write-off. This is kinda why I mentioned the rideshare industry talks so much about ebitda; the equity side is so leveraged and volatile that it overshadows the operations numbers at this point, despite not actually having all that much impact in day-to-day operations.
        disgruntledphd2 5y ago
        Point me to a quarter where they have made a GAAP profit, please. Like, I've been bearish on Uber for a long time now, but would be happy to be proved wrong.
        lhorie 5y ago
        I mean, we already went over this, i.e. there isn't such a quarter on record, if that's the only metric you're looking at. At least from what I've seen, many analysts are bullish right now (mostly due to a combo of low stock price, growth momentum in hedged verticals and scale of operations). Another data point is Doordash; some have pointed out that Uber eats' volume is bigger than DD, yet that isn't reflecting in the stock price (i.e. they think uber is undervalued considering the trajectory of profit in uber's delivery segment) Disclaimer: I've been keeping a pretty close eye on uber because I have a fairly sizable stock position. My intention here isn't to shill or cheerlead or whatever. Obviously, take whatever I say with a grain of salt, do your own research, etc.
- mdoms 5y ago
  > adjusted ebitda You can just say "fake".

Zanfa 5y ago

Uber has lost roughly $25 billion dollars to date, so any talk of profitability is ridiculous, even if you believe their “adjusted-EBITDA” numbers which simply ignore hundreds of millions in expenses in their last quarter.

redsparrow 5y ago

In the linked transcript Doctorow suggests that Uber's profits come from selling off divisions. "I’m finally curing my starvation by eating my own arms" is the rather colourful metaphor he uses. Does that line up with the 2021Q3 profit you mention, or maybe he's talking about something that happened earlier?

lhorie 5y ago
There were some boosts to some numbers in some quarter from sale of divisions (the self-driving division acquisition by Aurora being one of the bigger one) yes, and there were also some boosts from pulling out of some markets (e.g. the Grab deal) but conversely, the timing of the Didi stake write-off in Q3 also put a negative dent in the metrics for that quarter. IMHO, those are purely paper equity numbers and don't represent the state of core operations at all. The implication to bottom line, though, is that these division were bleeding cash and the path to positive ROI was dubious, so they had to go. If you're gonna go w/ an arm-eating metaphor, I think an appendicitis might be a closer metaphor to the real story. Regardless of equity-related stuff, the Q3 report did specifically state that the rides division were in the green for the first time ever (on adjusted ebitda basis), with eats posting a near-break-even loss. The point isn't so much about where exactly the "green" line stands (whether it's adjusted ebitda basis, regular ebitda basis or GAP), but that the data points have been going up (and rather aggressively, according to some). This is supposed to suggest that operations are no longer bleeding cash mindlessly and actually working towards optimizing expenses etc.
- redsparrow 5y ago
  Interesting, thanks for the detailed response. It's fun to listen to Doctorow talk trash but a lot of details get lost in the process. It will be interesting to see what Uber can do with the position they're in.