5 ms·

> I mean if we really look at some of the business models for these companies, they're clearly unsustainable. Uber is a prime example of a company that seems de

by dahdum 4y ago

> I mean if we really look at some of the business models for these companies, they're clearly unsustainable. Uber is a prime example of a company that seems destined to fail. Lyft and Uber are both very near profitability and things are looking pretty good for them over the next couple years. Why do you believe they are destined to fail? Established markets have been profitable for a while.

christkv 4y ago
In a recession they provide a luxury good that might be down prioritized by customers to save money.
- PeterisP 4y ago
  In a recession some people suddenly are eager for any job, no matter how bad, driving down Uber's "cost of goods sold" i.e. driver fees.. But in general economic downturns are tricky, as they affect different groups differently - are the people who would suffer in a recession the same people who are currently using Uber?
  - vkou 4y ago
    Driver fees are already so low that between depreciation, gas, and your time, you're barely making ends meet driving. They can't squeeze the drivers any further, unless they only want people to be driving 15-year-old beaters.
    - missedthecue 4y ago
      Boy, this is an evergreen narrative on HN, but I don't really think it's true. The total all-in cost of a Prius (depreciation, maintenance, gasoline, etc...) is about 30 cents per mile. Uber drivers make about $1-$2 per mile which is a pretty big margin. Uber has been around for over 10 years now. Sure, not everyone is an accountant, but if Uber drained every driver's wallet, they'd have noticed by now. Interesting that it's usually only people who have never driven for Uber that claim it's completely unprofitable.
      - vkou 4y ago
        How many uber drivers are in Priuses? I haven't ridden in a single one... How many people do you personally know that make their living as an Uber driver? I don't mean pensioners making beer money, or people doing it as a side job, here. I know one. He's been doing it for a year and half, or so. He doesn't own his car. he has to lease it on a weekly basis, and he's paying through the nose for the privilege. He's doing it because his credit is shit, and he has no savings to buy a car outright. He's getting ahead, but if driver rates get cut, he'll be going right back to being a line cook.
        missedthecue 4y ago
        Almost every Uber I've ever taken has been a Prius, save for the few occasions I've been in an Uber black. Still, the math isn't much different for a Corolla or Civic. And the more you drive, the cheaper the cost per mile is. Personally, I don't know anyone driving full time, but still know several driving 10 or so hours per week and they make about $300 for it.
        Jommi 4y ago
        the first sentence is a terrible take unfortunately, prius one of the most popular taxi and ridehailing cars ever, it's sully arund >50% of car supply in most western cities. As usual, you are conflsting your singular consumer experience of Uber with the global business giant Uber.
        vkou 4y ago
        Oh, I don't disagree about taxis. Priuses are everywhere in that space, and for good reason. If you are going to make a living driving, you should probably drive one. I do disagree on Ubers. I see very few Priuses, but there's a different explanation to that, that I missed. Casual drivers, people doing it as a side thing, or for beer money didn't optimize their car purchase for the purpose of driving a taxi. I suppose full-time drivers are more likely to drive one.
        cu6LANde9fbnSgw 4y ago
        I have literally never once seen a Prius as a taxi in the US.
  - KptMarchewa 4y ago
    Yeah - Uber both eats and taxi part was extremely cheap during any restrictions. Now it's easily 100-150% more expensive here.
  - juve1996 4y ago
    That's not true, really, in this case with inflation. There will be no point in taking such low paying jobs. We're already seeing massive shortages at the low end of employment - working for that cheap simply doesn't make economic sense.
georgeecollins 4y ago
>> Lyft and Uber are both very near profitability As they have been for over a decade. Just not actually GAAP profitable, except maybe a one off sale to DiDi. >> Established markets have been profitable for a while. So what market is Uber not established in? Are they pouring their oceans of profit from New York, Los Angeles and London into building a business in La Paz? I am sure they are trying to grow in places but they are way past the point where their profitable markets could fund growth. But they don't seem to. I am sure there is a profitable and enduring business in Uber in some markets and at some prices. I just think they know that the economic realities of that business would not support their public stock valuation. So they work on self driving and buy postmates rather than focus on those profitable established markets.
- ceeplusplus 4y ago
  Uber's net GAAP loss, excluding losses from investments in DiDi and other companies, is around 300m last quarter [1] which is a ~1% loss on their gross bookings. Most of that is stock based comp. Their FCF loss was only 47m last quarter. I know HN likes to hate on Uber and other gig apps but a 1% margin is something they can easily make up given their stated take rate on mobility and delivery is around 20%. > So what market is Uber not established in If you follow their earnings calls (or that of DoorDash as well), advertising is a huge growing market for these companies. My guess is they take on an airline business model: zero to slim margins on the core offerings, but huge money on advertising and ancillary sources of revenue (for airlines, this is credit card points). [1] https://investor.uber.com/news-events/news/press-release-details/2022/Uber-Announces-Results-for-First-Quarter-2022/default.aspx https://investor.uber.com/news-events/news/press-release-det...
  - closewith 4y ago
    > (for airlines, this is credit card points) In the United States, maybe, the only market where credit card points are meaningful?
  - aetherson 4y ago
    I think we should split the difference. Yes, Uber is close to break-even and they aren't going to just disappear. But there's still a big gap for them to close between "breaking even" and "profitable enough to justify a $50B valuation." There's plenty of room for a moderate view in which Uber survives as a business but their investors are extremely unhappy.

by dahdum 4y ago

christkv 4y ago

In a recession they provide a luxury good that might be down prioritized by customers to save money.

PeterisP 4y ago
In a recession some people suddenly are eager for any job, no matter how bad, driving down Uber's "cost of goods sold" i.e. driver fees.. But in general economic downturns are tricky, as they affect different groups differently - are the people who would suffer in a recession the same people who are currently using Uber?
- vkou 4y ago
  Driver fees are already so low that between depreciation, gas, and your time, you're barely making ends meet driving. They can't squeeze the drivers any further, unless they only want people to be driving 15-year-old beaters.
  - missedthecue 4y ago
    Boy, this is an evergreen narrative on HN, but I don't really think it's true. The total all-in cost of a Prius (depreciation, maintenance, gasoline, etc...) is about 30 cents per mile. Uber drivers make about $1-$2 per mile which is a pretty big margin. Uber has been around for over 10 years now. Sure, not everyone is an accountant, but if Uber drained every driver's wallet, they'd have noticed by now. Interesting that it's usually only people who have never driven for Uber that claim it's completely unprofitable.
    - vkou 4y ago
      How many uber drivers are in Priuses? I haven't ridden in a single one... How many people do you personally know that make their living as an Uber driver? I don't mean pensioners making beer money, or people doing it as a side job, here. I know one. He's been doing it for a year and half, or so. He doesn't own his car. he has to lease it on a weekly basis, and he's paying through the nose for the privilege. He's doing it because his credit is shit, and he has no savings to buy a car outright. He's getting ahead, but if driver rates get cut, he'll be going right back to being a line cook.
      - missedthecue 4y ago
        Almost every Uber I've ever taken has been a Prius, save for the few occasions I've been in an Uber black. Still, the math isn't much different for a Corolla or Civic. And the more you drive, the cheaper the cost per mile is. Personally, I don't know anyone driving full time, but still know several driving 10 or so hours per week and they make about $300 for it.
      - Jommi 4y ago
        the first sentence is a terrible take unfortunately, prius one of the most popular taxi and ridehailing cars ever, it's sully arund >50% of car supply in most western cities. As usual, you are conflsting your singular consumer experience of Uber with the global business giant Uber.
        vkou 4y ago
        Oh, I don't disagree about taxis. Priuses are everywhere in that space, and for good reason. If you are going to make a living driving, you should probably drive one. I do disagree on Ubers. I see very few Priuses, but there's a different explanation to that, that I missed. Casual drivers, people doing it as a side thing, or for beer money didn't optimize their car purchase for the purpose of driving a taxi. I suppose full-time drivers are more likely to drive one.
        cu6LANde9fbnSgw 4y ago
        I have literally never once seen a Prius as a taxi in the US.
- KptMarchewa 4y ago
  Yeah - Uber both eats and taxi part was extremely cheap during any restrictions. Now it's easily 100-150% more expensive here.
- juve1996 4y ago
  That's not true, really, in this case with inflation. There will be no point in taking such low paying jobs. We're already seeing massive shortages at the low end of employment - working for that cheap simply doesn't make economic sense.

georgeecollins 4y ago

>> Lyft and Uber are both very near profitability As they have been for over a decade. Just not actually GAAP profitable, except maybe a one off sale to DiDi. >> Established markets have been profitable for a while. So what market is Uber not established in? Are they pouring their oceans of profit from New York, Los Angeles and London into building a business in La Paz? I am sure they are trying to grow in places but they are way past the point where their profitable markets could fund growth. But they don't seem to. I am sure there is a profitable and enduring business in Uber in some markets and at some prices. I just think they know that the economic realities of that business would not support their public stock valuation. So they work on self driving and buy postmates rather than focus on those profitable established markets.

ceeplusplus 4y ago
Uber's net GAAP loss, excluding losses from investments in DiDi and other companies, is around 300m last quarter [1] which is a ~1% loss on their gross bookings. Most of that is stock based comp. Their FCF loss was only 47m last quarter. I know HN likes to hate on Uber and other gig apps but a 1% margin is something they can easily make up given their stated take rate on mobility and delivery is around 20%. > So what market is Uber not established in If you follow their earnings calls (or that of DoorDash as well), advertising is a huge growing market for these companies. My guess is they take on an airline business model: zero to slim margins on the core offerings, but huge money on advertising and ancillary sources of revenue (for airlines, this is credit card points). [1] https://investor.uber.com/news-events/news/press-release-details/2022/Uber-Announces-Results-for-First-Quarter-2022/default.aspx https://investor.uber.com/news-events/news/press-release-det...
- closewith 4y ago
  > (for airlines, this is credit card points) In the United States, maybe, the only market where credit card points are meaningful?
- aetherson 4y ago
  I think we should split the difference. Yes, Uber is close to break-even and they aren't going to just disappear. But there's still a big gap for them to close between "breaking even" and "profitable enough to justify a $50B valuation." There's plenty of room for a moderate view in which Uber survives as a business but their investors are extremely unhappy.