22 ms·

Live Counter of Uber's Net Losses ($27B and Counting)

107 points by tr3ntg 4y ago

rohitb91 4y ago
Ponzi scheme
senttoschool 4y ago
I can see Uber (and many many tech companies) become profitable by significantly shrinking their tech and HQ workforce, removing driver/rider incentives and admit that the total addressable market is much smaller than they thought. I think this is what will happen when interest rates go up and free money stops. Unfortunately, this will mean a lot of tech workers will lose their jobs and/or have their salaries decreased significantly.
- pclmulqdq 4y ago
  If they do this, their stock will collapse. They are priced on future growth (which is already getting a lot less valuable), so if they admit there is a cap, they will start trading at a reasonable P/E ratio. Edit: P/S ratio, not P/E ratio. Of course their P/E ratio is negative right now.
  - api 4y ago
    It'll be interesting to see what happens when they end up with a viable business but one that is probably never going to return the crazy returns that were originally priced into the valuation. There are tons and tons of these across all sectors left over from a prolonged era of incredibly cheap money.
    - pclmulqdq 4y ago
      Ironically, what happened to WeWork is a very soft version of what will likely happen to the Apps and SaaS space in a high-interest environment.
  - rrdharan 4y ago
    > they will start trading at a reasonable P/E ratio As in, a positive one?
    - pclmulqdq 4y ago
      I should have said P/S ratio.
    - dchftcs 4y ago
      Slightly positive perhaps, as an investor may ask to get paid to hold Uber for their troubles.
  - senttoschool 4y ago
    >If they do this, their stock will collapse. The other option could be bankruptcy which would bring their stock to $0.
    - yywwbbn 4y ago
      If they are cashflow positive this year that seems unlikely
      - senttoschool 4y ago
        Hence, why my original post said Uber will have to shrink tech/HQ employees, reduce incentives, and admit that growth will reverse/decline.
        ProAm 4y ago
        All they need to do is license their logistics software and they will be extremely profitable.
        senttoschool 4y ago
        License their logistics software to who? Lyft? Bolt? Very few business wants/can to enter ride sharing, food delivery industry.
        ProAm 4y ago
        You can use this style of logistical/pricing software across so many industries.
        senttoschool 4y ago
        Not really. It's just a bunch of basic demand/supply algorithms. Nothing special. I doubt Uber can make a generic version that other businesses will buy.
        4y ago
  - _ea1k 4y ago
    Isn't it currently about 2X P/S? That's not terrible in itself.
    - pclmulqdq 4y ago
      If you think about what its sales are, it should be trading a lot lower than 1. Most of what it is doing is matching a buyer to a seller, and taking some amount of that transaction in exchange for facilitating the transaction (I think ~30-40%). Today, it counts the entire price of a ride as revenue, and the entire cost of that sale as an expense. In comparison, if you use Uber's ideas of what is revenue and what is an expense, Ebay (another transaction facilitator) had a P/S ratio of 0.34 in 2019 with a fee of ~10%. Ebay does not count revenue the same way Uber does - they only count their fees as revenue. Another transaction facilitator, Costco (yes, I am comparing Uber to a retail chain - it makes the same fundamental trade), has a P/S ratio of 0.89. Walmart is 0.61. Nobody who retails something from a wholesaler has a P/S ratio greater than 1. Uber is an online retailer of taxi services. Most two-sided platforms treat their fee as their earnings, and thus can claim a very healthy margin. Uber doesn't.
      - _ea1k 4y ago
        Thank you for the explanation. That makes a lot of sense and does provide a much better way to estimate their value relative to sales.
- ceejayoz 4y ago
  The first company to ditch driver incentives is likely to be the first to have folks going "huh, no drivers on service X available... I'll try service Y" and collapse.
  - JohnJamesRambo 4y ago
    After reading your comment I had an image of a New York City cab driver and his medallion and the meter, him looking over his shoulder saying “Welcome back” as he hits the meter.
    - gonzo41 4y ago
      That guy is bankrupt and homeless now. His medallion was worthless because of uber and the large loan he took to get it ruined his life. etc etc.
      - theplumber 4y ago
        >> That guy is bankrupt and homeless now. His medallion was worthless Good riddance! The reason why people rushed to uber was that the taxi services were so bad. You can still see people near the taxi station/taxi cars waiting for uber. Wonder why... That being said it looks like, unfortunately, the taxi industry is not over yet.
        gonzo41 4y ago
        Good riddance to that person?
        wussboy 4y ago
        Yup. My slavish devotion to “personal responsibility” means I can’t even understand how decisions made at a corporation, insulated from the very personal responsibility I care so much about and powered by unlimited piles of cash can run human lives.
        4y ago
- gonzo41 4y ago
  When this happens, the amount of uber cars will probably decrease. So there'll actually be a shortage again the taxi market.
- sva_ 4y ago
  I sometimes wonder what Uber is even doing with their 30k employees. A look at their blog[0] doesn't really give me much of an idea either, it all seems to be scattered, non-concentrated efforts into various directions. [0] https://www.uber.com/en-DE/blog/ https://www.uber.com/en-DE/blog/
  - pid-1 4y ago
    I'd guess a business like Uber must need legions of driver / customer support.
    - sva_ 4y ago
      You may be right about customer support, but I don't think they consider their drivers employees. > Uber considers its drivers to be independent contractors https://www.lawyers.com/legal-info/labor-employment-law/wage-and-hour-law/are-uber-drivers-considered-employees.html https://www.lawyers.com/legal-info/labor-employment-law/wage...
      - pid-1 4y ago
        I meant customer support for drivers and "real customers". Sorry for not being clear.
- hdjjhhvvhga 4y ago
  > Unfortunately, this will mean a lot of tech workers will lose their jobs As far as I can tell, Uber doesn't employ developers - you just have a chance to become their "technology partner". And while there are probably 3500 of them, once this pyramid scheme called Uber falls, many of these people will go elsewhere. The question is: will that be a bad thing? From the point of view of the total benefit to the society, it's probably better that they work on truly sustainable products.
- phphphphp 4y ago
  That's been the narrative for many years, though. The idea that "...they're unprofitable by choice in pursuit of growth..." is indistinguishable from a bad business model. Most locales already have Uber alternatives that are sustainable and have a better service quality, the only reason Uber has marketshare in these locales is because Uber is cheaper... due to the loss-making behaviours. If Uber removed their incentives, they'd immediately lose marketshare to the local competitors that are already sustainable. Uber is incentives, Uber is investor-subsidised transport.
  - dboreham 4y ago
    > Most locales already have Uber alternatives that are sustainable and have a better service quality... Based on my experience recently in Europe, this isn't the case.
- rchaud 4y ago
  > removing driver/rider incentives and admit that the total addressable market is much smaller than they thought. I think this is what will happen when interest rates go up and free money stops. Ah, for the halcyon days of 2014 when we could blame high taxi fares on the low-tech bureaucrats running medallion rackets. Uber and taxi fares are pretty much neck and neck these days. How much more could they cut driver compensation?
- onlyrealcuzzo 4y ago
  > I think this is what will happen when interest rates go up and free money stops. And what happens to pension funds if interest rates go up and stay up? What happens to government spending on debt as a percentage of tax revenues? What happens to personal debt service as a percentage of income? The modern world isn't going to work with positive REAL interest rates. So I'm skeptical they're going to stick around for more than a year without causing a bigger depression than The Great Depression.
cs702 4y ago
Consider adding links to the 10-Q's and 10-K's, in case anyone wants to verify.
deleted 4y ago
[deleted]
PaywallBuster 4y ago
Should do for other companies like Tesla popular target for short sellers - numbers are getting better but depend on what numbers you looking at (FCF, net earnings, EBITa, etc) edit: maybe the criticism is outdated, I'm not following too closely
- abc_lisper 4y ago
  Haha. How did Tesla lose money?
- LanceJones 4y ago
  Please… get specific and share the losses you speak of.
oogali 4y ago
The font should be red and the number prefixed with a hyphen.
- bdsa 4y ago
  Is a loss presented as -X a gain? (double negative)
  - smcl 4y ago
    I don't think people would interpret it that way, especially if it was red. But maybe surrounding the value in parentheses is a more unambiguous way to denote "this figure indicates a loss" but I'm not sure how well-known that is
stefan_ 4y ago
If you are curious how they went from $496M in 2021 to already $8.5B in 2022 despite promising to accelerate their profitability even more, $7.3B of those appear to be from "revaluation of Uber’s Aurora, Grab, and Zomato stakes". That's still more losses, though.
- makestuff 4y ago
  Similar thing happened with Amazon and their investment in Rivian. Q4 last year was like a 10b gain and then by q1 of 2022 it was a loss.
  - jlmorton 4y ago
    They did indeed write down their investment in Rivian, but they still made a healthy 3x gain, just not 30x.
- aardvarkr 4y ago
  This is especially useful context, thanks for sharing it!
- viscanti 4y ago
  Their promise to accelerate profitability was likely for their own operations and not their investments (where presumably they have much less control). $8.5B is a pretty big loss, but it might be unrelated to their actual business. That said, investors would be buying the operational business (still at a loss but EBIDTA profitable and seemingly making progress to overall profitability every quarter) and the Investment business (seems to continually lose money).
CobaltFire 4y ago
I imagine they are spending to push their numbers pretty hard right now; I regularly get 40% off of $25 coupons on UberEats that bring the delivered price down to below what I'd pay at the counter, not even counting gas and time to get there and back. That can't be sustainable, but I get the coupons faster than I spend them.
formvoltron 4y ago
Does this also take into account printing shares to give to employees and founders?
rogerkirkness 4y ago
Tesla got lifetime cashflow positive after burning $6B in accumulated losses, and has now paid all of those back prompting investors to ask for stock buybacks. Uber is just a terrible waste of capital to have an app company with an accumulated deficit almost five times as much as Tesla which makes cars.
- boh 4y ago
  Uber was essentially a financial instrument for VC investors to pump and then dump on the public markets. It's main function was to produce creditability rather than be an actual business.
  - Workaccount2 4y ago
    1.) Create incredibly useful company that the public mass adopts and uses. 2.) Fuel adoption by running in the red, subsidising consumer costs to keep prices low and fuel adoption. 3.) IPO and sucker all those consumers into buying shares in a company they know and love. 4.) Cash out and let the new shareholders figure out that the company isn't at all sustainable.
    - TheRealDunkirk 4y ago
      And the worst part is that business world has watched Uber (and WeWork, et. al.), and have tried to emulate the model with every new company created since.
      - toomuchtodo 4y ago
        Jack Welch meets Silicon Valley.
      - Aperocky 4y ago
        When money is free, this is what people will do, because it makes them money. It's interesting to see things crash and burn though now feds raised rates.
    - 4y ago
artursapek 4y ago
How much runway do they have left? Will Uber ever hit a wall and just die?
- mminer237 4y ago
  My understanding is that they're able to keep operating by selling more stock and by paying officers in stock. Uber would die if the stock price drops enough that it can't get enough cash to keep operating through those things.
  - nebula8804 4y ago
    So there is a Sword Of Damocles that could fall any time within the next year or so if the recession deepens?
jeffrallen 4y ago
I miss f'ed companies.
- indymike 4y ago
  One of the best dotcom era sites. I loved the comments.
davey48016 4y ago
I see Uber as a very expensive land grab for self driving taxis. Once self driving technology works, especially if multiple companies get it working around the same time, merging/integrating with Uber gets you into the app that everyone is already using to call a ride.
- yywwbbn 4y ago
  Except that Uber sold it’s self driving division so they are unlikely to be at the forefront of that transition. There is nothing special about their app/platform so they are unlikely to derive significant profits just from that.
- lm28469 4y ago
  > Once self driving technology works Once ? More like "if"
  - ghaff 4y ago
    The problem is even if/when you get to a reasonable facsimile of self-driving for easier conditions, e.g. highways in good weather, that does very little to get you door-to-door service in generally urban areas in most kinds of weather.
- notahacker 4y ago
  If self driving technology reaches the point where it can operate commercial taxi services legally and more cost-effectively than regular taxis, the people holding that collection of IP and licences won't need to spend $100bn on an app company to find customers.
- tsimionescu 4y ago
  People switch apps almost instantly once there is better service elsewhere. Nothing gets you searching for a new taxi app quicker than seeing a 10 minute wait for your Uber. There is almost 0 stickiness to taxi apps like Uber or Bolt or Lyft or [...]
- dboreham 4y ago
lm28469 4y ago
I only use uber when they send me 20-50% off coupons on uber eats. Forever thankful for the rich investors feeding me on the cheap
- gigaflop 4y ago
  Food tastes better when subsidized by VC millions/billions.
  - mamonster 4y ago
    Honestly think in 10-20 years (if we survive till then) we can tell our grandkids stories about how we basically got subsidized by VCs and sovereign wealth funds to enjoy Uber,DoorDash,Airbnb,etc deals due to ZIRP.
    - za3faran 4y ago
      Is Airbnb being subsidized like the others?
    - gigaflop 4y ago
      Will we ever see "The MBS Meal" at a Halal restaurant, as an in-app delivery-only offer?
shubhamjain 4y ago
One must understand that "profit" isn't always as rosy as it may seem, and "loss" sometimes isn't as bad. A company can show a lot of profit, but digging deep you'll realize that most of it is stuck in receivables. This wasn't really a bad year for Uber, they became Cash Flow Positive for the first time [1]. The reason for their loss was valuation decline of its stake in Didi and Grab [2]. > The loss was due almost entirely to revaluation of its stakes in Grab and Didi in Asia and autonomous driving technology enterprise Aurora in the United States, the earnings report said. [1]: https://auto.economictimes.indiatimes.com/news/aftermarket/uber-turns-cash-flow-positive-for-the-first-time/93300552 https://auto.economictimes.indiatimes.com/news/aftermarket/u... [2]: https://gadgets360.com/apps/news/uber-net-loss-q1-2022-usd-6-billion-grab-didi-aurora-2947840 https://gadgets360.com/apps/news/uber-net-loss-q1-2022-usd-6...
- alexb_ 4y ago
  As it turns out, if you ignore all of the ways it loses money, Uber makes money
  - yywwbbn 4y ago
    Berkshire Hathaway suffered an 30+ billion loss just because Apple’s stock price declined. Neither company is losing money and both are highly cashflow positive.
    - smcl 4y ago
      Berkshire Hathaway has been incredibly profitable over its lifetime though. Uber has been incredibly unprofitable throughout its existence
      - yywwbbn 4y ago
        My point was that while they are suffering huge losses this year they are actually doing fine. Seems the situation is similar with Uber, just that they were unlucky to become cash flow positive at the same time the market went down significantly.
z9znz 4y ago
The emporer still has no clothes. But as is the tech startup way, the investment round ponzi scheme has worked brilliantly. Pre-IPO investors got their profits and then passed the black hole to foolish stock market investors. There are a lot of Uber defenders on HN. I suspect they are current or former employees or are people involved in other startups which play the same ponzi game. Uber did do one thing well, and that was to create a modern and usually effective way for riders to get taxis on demand. Presumably (can't know as I'm not a driver) they also provided a good way for any driver to get riders. But they've done so much so wrong... starting with willfully ignoring local regulations (which allowed them to charge less than legal taxis) and continuing with poor driver vetting and monitoring which has resulted in some terrible events occurring with drivers and passengers. Uber should be held up as an example of how twisted capitalism has become and why regulation is often necessary and should have teeth when it exists. The problem is that US politics is so dependent on and addicted to corporate finance that there is no incentive to fix this. It's more of the "as long as I cash out, I'll do things that are bad for the public". This is especially true when the people who write the laws are shareholders.
- dmitriid 4y ago
  > Pre-IPO investors got their profits and then passed the black hole to foolish stock market investors. Funnily enough, in their IPO filing Uber said they might never be profitable. And still...
dmitriid 4y ago
I've been telling people for years. All the HN darlings, all these amazing innovative unicorns, and Uber especially, only exist because of unlimited investor money and price dumping. A while back I did a cursory search through YCombinators "most successful companies", and guess what: https://news.ycombinator.com/item?id=27485360 https://news.ycombinator.com/item?id=27485360 Hundreds of millions of dollars lost every year for years.
- ghaff 4y ago
  Uber is mostly just the biggest example of how many people with disposable income will happily consume lots of services if they're priced well below what they cost to provide.
- wussboy 4y ago
  That link didn’t work for me. But I would like to read it. Can you please confirm?
  - dmitriid 4y ago
    Hmm. Worked for me. If it continues to not work, here's a screenshot: https://imgur.com/a/zwgMhzR https://imgur.com/a/zwgMhzR
- dboreham 4y ago
  AirBnB seems to be a counterexample. Ever-rising fees, but it's still pretty much the only show in town if you want a non-hotel experience.
  - dmitriid 4y ago
    According to this: https://www.businessofapps.com/data/airbnb-statistics/ https://www.businessofapps.com/data/airbnb-statistics/ AirBnB has not had a single profitable year, losing 4.5 billion dollars in 2020 (okay, it was the pandemic year). How is it a counter example?
axg11 4y ago
Is there anything like this for a wider basket of (tech) companies?
beAbU 4y ago
~$30B of the wealthiest people's money that's redistributed to the masses. Bravo!
karussell 4y ago
If you dig into the numbers of the taxi market you'll learn that this market had very low margins even before Uber "disrupted" it (certain local markets excluded). Good for me that I realized this before I focussed on this "obvious" and tempting market with my own company. The only real disruption Uber delivered was that it got rid of the employees every taxi company has and convinced many people that driving for them is a win (although often this is not true, if you consider all expenses). Certainly there is some small efficiency gains through the app and disrupting some nonsense regulations (e.g. here in Germany a taxi has to return to its station before it can pick up a new passenger). But the major part is the employee trick. Maybe they bet on the self-driving cars, but they sold ATG and so this can't be part of their plan.
- ghaff 4y ago
  It was obvious for years that: 1.) Self-driving, especially to the degree necessary for a taxi service, was never going to happen in a timeframe that was economically interesting for Uber and 2.) Prices were always going to have to end up in the ballpark of taxis and private car services to be profitable--with everything that implies for the size of market/network 3.) Uber did offer a better experience than many existing taxi companies but that wasn't really a material moat and taxis now widely offer apps
fairity 4y ago
This comment thread is a case study in confirmation bias. People are looking for data to support their belief that VC-backed tech businesses endlessly light cash on fire. And, refuse to dig a layer deeper to get to the truth, which is that Uber is currently already a fundamentally profitable business. Uber's free cash flow was +$672m and +$382m in the last two quarters. The reason they reported negative income was due to huge write downs in past investments. For all those who have been flabbergasted by Uber's propensity to burn cash, the last two quarters are an opportunity to learn a lesson in business, if you're up for it.
_ea1k 4y ago
Numbers like this should really be based on cash flow. I'm sure it'd still be negative, but the rate of change would be different.
LatteLazy 4y ago
The losses are primarily due to it writing off equity investments in food apps and self driving cars. It made a profit as recently as Q4 2022. Revenue (a much harder number to manipulate than profit) has been growing rapidly. https://www.globaldata.com/data-insights/technology--media-and-telecom/uber-posts-first-positive-cash-flow-despite-26-billion-loss-in-q2-2022/#:~:text=Net%20Profit%2FLoss,-2021%7CQ3&text=The%20ride%2Dhailing%20company%20reported,million%2C%20which%20removed%20certain%20costs https://www.globaldata.com/data-insights/technology--media-a....
dncornholio 4y ago
How this company cannot make money is beyond me. Surely developer accounts on Apple and Android can't be this expensive right? Billing is easy as all the drivers are freelancing. You could easily run this service with only a few teams.
joshe 4y ago
It's funny how angsty 2018 era San Francisco was about ride sharing. Everyone thought it was "big tech is crushing the world", when really it was "vc's and endowments are going to subsidize your rides for 10 years because they are terrified of missing out". Thanks Yale! Rides were $5 cross town in SF. Those losses? They are still subsidizing them, just by less.
- mola 4y ago
  Subsidizing your rides while corrupting your democracy by pooring endless cash into lobying against worker rights... It's a pretty heavy price.
  - joshe 4y ago
    Another big myth is that money is stopping all your ideas from being accepted. The truth is that you haven't convinced people. This is true even for entirely correct ideas. None of those were going to pass anyway, so it's no price at all.
    - mola 4y ago
      Huh? Worker right exist and codified in law, Uber spent millions if not billions in lobbying to get them changed all over the world.
singularity2001 4y ago
As much as I dislike Uber, $27B is nothing if it succeeds in monopolizing any aspect of transportation.
- alexb_ 4y ago
  Is it monopolizing transportation, or is it monopolizing driver/rider incentives?

107 points by tr3ntg 4y ago

Ponzi scheme

I can see Uber (and many many tech companies) become profitable by significantly shrinking their tech and HQ workforce, removing driver/rider incentives and admit that the total addressable market is much smaller than they thought. I think this is what will happen when interest rates go up and free money stops. Unfortunately, this will mean a lot of tech workers will lose their jobs and/or have their salaries decreased significantly.

pclmulqdq 4y ago
If they do this, their stock will collapse. They are priced on future growth (which is already getting a lot less valuable), so if they admit there is a cap, they will start trading at a reasonable P/E ratio. Edit: P/S ratio, not P/E ratio. Of course their P/E ratio is negative right now.
- api 4y ago
  It'll be interesting to see what happens when they end up with a viable business but one that is probably never going to return the crazy returns that were originally priced into the valuation. There are tons and tons of these across all sectors left over from a prolonged era of incredibly cheap money.
  - pclmulqdq 4y ago
    Ironically, what happened to WeWork is a very soft version of what will likely happen to the Apps and SaaS space in a high-interest environment.
- rrdharan 4y ago
  > they will start trading at a reasonable P/E ratio As in, a positive one?
  - pclmulqdq 4y ago
    I should have said P/S ratio.
  - dchftcs 4y ago
    Slightly positive perhaps, as an investor may ask to get paid to hold Uber for their troubles.
- senttoschool 4y ago
  >If they do this, their stock will collapse. The other option could be bankruptcy which would bring their stock to $0.
  - yywwbbn 4y ago
    If they are cashflow positive this year that seems unlikely
    - senttoschool 4y ago
      Hence, why my original post said Uber will have to shrink tech/HQ employees, reduce incentives, and admit that growth will reverse/decline.
      - ProAm 4y ago
        All they need to do is license their logistics software and they will be extremely profitable.
        senttoschool 4y ago
        License their logistics software to who? Lyft? Bolt? Very few business wants/can to enter ride sharing, food delivery industry.
        ProAm 4y ago
        You can use this style of logistical/pricing software across so many industries.
        senttoschool 4y ago
        Not really. It's just a bunch of basic demand/supply algorithms. Nothing special. I doubt Uber can make a generic version that other businesses will buy.
        4y ago
- _ea1k 4y ago
  Isn't it currently about 2X P/S? That's not terrible in itself.
  - pclmulqdq 4y ago
    If you think about what its sales are, it should be trading a lot lower than 1. Most of what it is doing is matching a buyer to a seller, and taking some amount of that transaction in exchange for facilitating the transaction (I think ~30-40%). Today, it counts the entire price of a ride as revenue, and the entire cost of that sale as an expense. In comparison, if you use Uber's ideas of what is revenue and what is an expense, Ebay (another transaction facilitator) had a P/S ratio of 0.34 in 2019 with a fee of ~10%. Ebay does not count revenue the same way Uber does - they only count their fees as revenue. Another transaction facilitator, Costco (yes, I am comparing Uber to a retail chain - it makes the same fundamental trade), has a P/S ratio of 0.89. Walmart is 0.61. Nobody who retails something from a wholesaler has a P/S ratio greater than 1. Uber is an online retailer of taxi services. Most two-sided platforms treat their fee as their earnings, and thus can claim a very healthy margin. Uber doesn't.
    - _ea1k 4y ago
      Thank you for the explanation. That makes a lot of sense and does provide a much better way to estimate their value relative to sales.
ceejayoz 4y ago
The first company to ditch driver incentives is likely to be the first to have folks going "huh, no drivers on service X available... I'll try service Y" and collapse.
- JohnJamesRambo 4y ago
  After reading your comment I had an image of a New York City cab driver and his medallion and the meter, him looking over his shoulder saying “Welcome back” as he hits the meter.
  - gonzo41 4y ago
    That guy is bankrupt and homeless now. His medallion was worthless because of uber and the large loan he took to get it ruined his life. etc etc.
    - theplumber 4y ago
      >> That guy is bankrupt and homeless now. His medallion was worthless Good riddance! The reason why people rushed to uber was that the taxi services were so bad. You can still see people near the taxi station/taxi cars waiting for uber. Wonder why... That being said it looks like, unfortunately, the taxi industry is not over yet.
      - gonzo41 4y ago
        Good riddance to that person?
        wussboy 4y ago
        Yup. My slavish devotion to “personal responsibility” means I can’t even understand how decisions made at a corporation, insulated from the very personal responsibility I care so much about and powered by unlimited piles of cash can run human lives.
        4y ago
gonzo41 4y ago
When this happens, the amount of uber cars will probably decrease. So there'll actually be a shortage again the taxi market.
sva_ 4y ago
I sometimes wonder what Uber is even doing with their 30k employees. A look at their blog[0] doesn't really give me much of an idea either, it all seems to be scattered, non-concentrated efforts into various directions. [0] https://www.uber.com/en-DE/blog/ https://www.uber.com/en-DE/blog/
- pid-1 4y ago
  I'd guess a business like Uber must need legions of driver / customer support.
  - sva_ 4y ago
    You may be right about customer support, but I don't think they consider their drivers employees. > Uber considers its drivers to be independent contractors https://www.lawyers.com/legal-info/labor-employment-law/wage-and-hour-law/are-uber-drivers-considered-employees.html https://www.lawyers.com/legal-info/labor-employment-law/wage...
    - pid-1 4y ago
      I meant customer support for drivers and "real customers". Sorry for not being clear.
hdjjhhvvhga 4y ago
> Unfortunately, this will mean a lot of tech workers will lose their jobs As far as I can tell, Uber doesn't employ developers - you just have a chance to become their "technology partner". And while there are probably 3500 of them, once this pyramid scheme called Uber falls, many of these people will go elsewhere. The question is: will that be a bad thing? From the point of view of the total benefit to the society, it's probably better that they work on truly sustainable products.
phphphphp 4y ago
That's been the narrative for many years, though. The idea that "...they're unprofitable by choice in pursuit of growth..." is indistinguishable from a bad business model. Most locales already have Uber alternatives that are sustainable and have a better service quality, the only reason Uber has marketshare in these locales is because Uber is cheaper... due to the loss-making behaviours. If Uber removed their incentives, they'd immediately lose marketshare to the local competitors that are already sustainable. Uber is incentives, Uber is investor-subsidised transport.
- dboreham 4y ago
  > Most locales already have Uber alternatives that are sustainable and have a better service quality... Based on my experience recently in Europe, this isn't the case.
rchaud 4y ago
> removing driver/rider incentives and admit that the total addressable market is much smaller than they thought. I think this is what will happen when interest rates go up and free money stops. Ah, for the halcyon days of 2014 when we could blame high taxi fares on the low-tech bureaucrats running medallion rackets. Uber and taxi fares are pretty much neck and neck these days. How much more could they cut driver compensation?
onlyrealcuzzo 4y ago
> I think this is what will happen when interest rates go up and free money stops. And what happens to pension funds if interest rates go up and stay up? What happens to government spending on debt as a percentage of tax revenues? What happens to personal debt service as a percentage of income? The modern world isn't going to work with positive REAL interest rates. So I'm skeptical they're going to stick around for more than a year without causing a bigger depression than The Great Depression.

cs702 4y ago

Consider adding links to the 10-Q's and 10-K's, in case anyone wants to verify.

deleted 4y ago

[deleted]

PaywallBuster 4y ago

Should do for other companies like Tesla popular target for short sellers - numbers are getting better but depend on what numbers you looking at (FCF, net earnings, EBITa, etc) edit: maybe the criticism is outdated, I'm not following too closely

abc_lisper 4y ago
Haha. How did Tesla lose money?
LanceJones 4y ago
Please… get specific and share the losses you speak of.

oogali 4y ago

The font should be red and the number prefixed with a hyphen.

bdsa 4y ago
Is a loss presented as -X a gain? (double negative)
- smcl 4y ago
  I don't think people would interpret it that way, especially if it was red. But maybe surrounding the value in parentheses is a more unambiguous way to denote "this figure indicates a loss" but I'm not sure how well-known that is

stefan_ 4y ago

If you are curious how they went from $496M in 2021 to already $8.5B in 2022 despite promising to accelerate their profitability even more, $7.3B of those appear to be from "revaluation of Uber’s Aurora, Grab, and Zomato stakes". That's still more losses, though.

makestuff 4y ago
Similar thing happened with Amazon and their investment in Rivian. Q4 last year was like a 10b gain and then by q1 of 2022 it was a loss.
- jlmorton 4y ago
  They did indeed write down their investment in Rivian, but they still made a healthy 3x gain, just not 30x.
aardvarkr 4y ago
This is especially useful context, thanks for sharing it!
viscanti 4y ago
Their promise to accelerate profitability was likely for their own operations and not their investments (where presumably they have much less control). $8.5B is a pretty big loss, but it might be unrelated to their actual business. That said, investors would be buying the operational business (still at a loss but EBIDTA profitable and seemingly making progress to overall profitability every quarter) and the Investment business (seems to continually lose money).

CobaltFire 4y ago

I imagine they are spending to push their numbers pretty hard right now; I regularly get 40% off of $25 coupons on UberEats that bring the delivered price down to below what I'd pay at the counter, not even counting gas and time to get there and back. That can't be sustainable, but I get the coupons faster than I spend them.

formvoltron 4y ago

Does this also take into account printing shares to give to employees and founders?

rogerkirkness 4y ago

Tesla got lifetime cashflow positive after burning $6B in accumulated losses, and has now paid all of those back prompting investors to ask for stock buybacks. Uber is just a terrible waste of capital to have an app company with an accumulated deficit almost five times as much as Tesla which makes cars.

boh 4y ago
Uber was essentially a financial instrument for VC investors to pump and then dump on the public markets. It's main function was to produce creditability rather than be an actual business.
- Workaccount2 4y ago
  1.) Create incredibly useful company that the public mass adopts and uses. 2.) Fuel adoption by running in the red, subsidising consumer costs to keep prices low and fuel adoption. 3.) IPO and sucker all those consumers into buying shares in a company they know and love. 4.) Cash out and let the new shareholders figure out that the company isn't at all sustainable.
  - TheRealDunkirk 4y ago
    And the worst part is that business world has watched Uber (and WeWork, et. al.), and have tried to emulate the model with every new company created since.
    - toomuchtodo 4y ago
      Jack Welch meets Silicon Valley.
    - Aperocky 4y ago
      When money is free, this is what people will do, because it makes them money. It's interesting to see things crash and burn though now feds raised rates.
  - 4y ago

artursapek 4y ago

How much runway do they have left? Will Uber ever hit a wall and just die?

mminer237 4y ago
My understanding is that they're able to keep operating by selling more stock and by paying officers in stock. Uber would die if the stock price drops enough that it can't get enough cash to keep operating through those things.
- nebula8804 4y ago
  So there is a Sword Of Damocles that could fall any time within the next year or so if the recession deepens?

jeffrallen 4y ago

I miss f'ed companies.

indymike 4y ago
One of the best dotcom era sites. I loved the comments.

davey48016 4y ago

I see Uber as a very expensive land grab for self driving taxis. Once self driving technology works, especially if multiple companies get it working around the same time, merging/integrating with Uber gets you into the app that everyone is already using to call a ride.

yywwbbn 4y ago
Except that Uber sold it’s self driving division so they are unlikely to be at the forefront of that transition. There is nothing special about their app/platform so they are unlikely to derive significant profits just from that.
lm28469 4y ago
> Once self driving technology works Once ? More like "if"
- ghaff 4y ago
  The problem is even if/when you get to a reasonable facsimile of self-driving for easier conditions, e.g. highways in good weather, that does very little to get you door-to-door service in generally urban areas in most kinds of weather.
notahacker 4y ago
If self driving technology reaches the point where it can operate commercial taxi services legally and more cost-effectively than regular taxis, the people holding that collection of IP and licences won't need to spend $100bn on an app company to find customers.
tsimionescu 4y ago
People switch apps almost instantly once there is better service elsewhere. Nothing gets you searching for a new taxi app quicker than seeing a 10 minute wait for your Uber. There is almost 0 stickiness to taxi apps like Uber or Bolt or Lyft or [...]
dboreham 4y ago

lm28469 4y ago

I only use uber when they send me 20-50% off coupons on uber eats. Forever thankful for the rich investors feeding me on the cheap

gigaflop 4y ago
Food tastes better when subsidized by VC millions/billions.
- mamonster 4y ago
  Honestly think in 10-20 years (if we survive till then) we can tell our grandkids stories about how we basically got subsidized by VCs and sovereign wealth funds to enjoy Uber,DoorDash,Airbnb,etc deals due to ZIRP.
  - za3faran 4y ago
    Is Airbnb being subsidized like the others?
  - gigaflop 4y ago
    Will we ever see "The MBS Meal" at a Halal restaurant, as an in-app delivery-only offer?

shubhamjain 4y ago

One must understand that "profit" isn't always as rosy as it may seem, and "loss" sometimes isn't as bad. A company can show a lot of profit, but digging deep you'll realize that most of it is stuck in receivables. This wasn't really a bad year for Uber, they became Cash Flow Positive for the first time [1]. The reason for their loss was valuation decline of its stake in Didi and Grab [2]. > The loss was due almost entirely to revaluation of its stakes in Grab and Didi in Asia and autonomous driving technology enterprise Aurora in the United States, the earnings report said. [1]: https://auto.economictimes.indiatimes.com/news/aftermarket/uber-turns-cash-flow-positive-for-the-first-time/93300552 https://auto.economictimes.indiatimes.com/news/aftermarket/u... [2]: https://gadgets360.com/apps/news/uber-net-loss-q1-2022-usd-6-billion-grab-didi-aurora-2947840 https://gadgets360.com/apps/news/uber-net-loss-q1-2022-usd-6...

alexb_ 4y ago
As it turns out, if you ignore all of the ways it loses money, Uber makes money
- yywwbbn 4y ago
  Berkshire Hathaway suffered an 30+ billion loss just because Apple’s stock price declined. Neither company is losing money and both are highly cashflow positive.
  - smcl 4y ago
    Berkshire Hathaway has been incredibly profitable over its lifetime though. Uber has been incredibly unprofitable throughout its existence
    - yywwbbn 4y ago
      My point was that while they are suffering huge losses this year they are actually doing fine. Seems the situation is similar with Uber, just that they were unlucky to become cash flow positive at the same time the market went down significantly.

z9znz 4y ago

The emporer still has no clothes. But as is the tech startup way, the investment round ponzi scheme has worked brilliantly. Pre-IPO investors got their profits and then passed the black hole to foolish stock market investors. There are a lot of Uber defenders on HN. I suspect they are current or former employees or are people involved in other startups which play the same ponzi game. Uber did do one thing well, and that was to create a modern and usually effective way for riders to get taxis on demand. Presumably (can't know as I'm not a driver) they also provided a good way for any driver to get riders. But they've done so much so wrong... starting with willfully ignoring local regulations (which allowed them to charge less than legal taxis) and continuing with poor driver vetting and monitoring which has resulted in some terrible events occurring with drivers and passengers. Uber should be held up as an example of how twisted capitalism has become and why regulation is often necessary and should have teeth when it exists. The problem is that US politics is so dependent on and addicted to corporate finance that there is no incentive to fix this. It's more of the "as long as I cash out, I'll do things that are bad for the public". This is especially true when the people who write the laws are shareholders.

dmitriid 4y ago
> Pre-IPO investors got their profits and then passed the black hole to foolish stock market investors. Funnily enough, in their IPO filing Uber said they might never be profitable. And still...

dmitriid 4y ago

I've been telling people for years. All the HN darlings, all these amazing innovative unicorns, and Uber especially, only exist because of unlimited investor money and price dumping. A while back I did a cursory search through YCombinators "most successful companies", and guess what: https://news.ycombinator.com/item?id=27485360 https://news.ycombinator.com/item?id=27485360 Hundreds of millions of dollars lost every year for years.

ghaff 4y ago
Uber is mostly just the biggest example of how many people with disposable income will happily consume lots of services if they're priced well below what they cost to provide.
wussboy 4y ago
That link didn’t work for me. But I would like to read it. Can you please confirm?
- dmitriid 4y ago
  Hmm. Worked for me. If it continues to not work, here's a screenshot: https://imgur.com/a/zwgMhzR https://imgur.com/a/zwgMhzR
dboreham 4y ago
AirBnB seems to be a counterexample. Ever-rising fees, but it's still pretty much the only show in town if you want a non-hotel experience.
- dmitriid 4y ago
  According to this: https://www.businessofapps.com/data/airbnb-statistics/ https://www.businessofapps.com/data/airbnb-statistics/ AirBnB has not had a single profitable year, losing 4.5 billion dollars in 2020 (okay, it was the pandemic year). How is it a counter example?

axg11 4y ago

Is there anything like this for a wider basket of (tech) companies?

beAbU 4y ago

~$30B of the wealthiest people's money that's redistributed to the masses. Bravo!

karussell 4y ago

If you dig into the numbers of the taxi market you'll learn that this market had very low margins even before Uber "disrupted" it (certain local markets excluded). Good for me that I realized this before I focussed on this "obvious" and tempting market with my own company. The only real disruption Uber delivered was that it got rid of the employees every taxi company has and convinced many people that driving for them is a win (although often this is not true, if you consider all expenses). Certainly there is some small efficiency gains through the app and disrupting some nonsense regulations (e.g. here in Germany a taxi has to return to its station before it can pick up a new passenger). But the major part is the employee trick. Maybe they bet on the self-driving cars, but they sold ATG and so this can't be part of their plan.

ghaff 4y ago
It was obvious for years that: 1.) Self-driving, especially to the degree necessary for a taxi service, was never going to happen in a timeframe that was economically interesting for Uber and 2.) Prices were always going to have to end up in the ballpark of taxis and private car services to be profitable--with everything that implies for the size of market/network 3.) Uber did offer a better experience than many existing taxi companies but that wasn't really a material moat and taxis now widely offer apps

fairity 4y ago

This comment thread is a case study in confirmation bias. People are looking for data to support their belief that VC-backed tech businesses endlessly light cash on fire. And, refuse to dig a layer deeper to get to the truth, which is that Uber is currently already a fundamentally profitable business. Uber's free cash flow was +$672m and +$382m in the last two quarters. The reason they reported negative income was due to huge write downs in past investments. For all those who have been flabbergasted by Uber's propensity to burn cash, the last two quarters are an opportunity to learn a lesson in business, if you're up for it.

_ea1k 4y ago

Numbers like this should really be based on cash flow. I'm sure it'd still be negative, but the rate of change would be different.

LatteLazy 4y ago

The losses are primarily due to it writing off equity investments in food apps and self driving cars. It made a profit as recently as Q4 2022. Revenue (a much harder number to manipulate than profit) has been growing rapidly. https://www.globaldata.com/data-insights/technology--media-and-telecom/uber-posts-first-positive-cash-flow-despite-26-billion-loss-in-q2-2022/#:~:text=Net%20Profit%2FLoss,-2021%7CQ3&text=The%20ride%2Dhailing%20company%20reported,million%2C%20which%20removed%20certain%20costs https://www.globaldata.com/data-insights/technology--media-a....

dncornholio 4y ago

How this company cannot make money is beyond me. Surely developer accounts on Apple and Android can't be this expensive right? Billing is easy as all the drivers are freelancing. You could easily run this service with only a few teams.

joshe 4y ago

It's funny how angsty 2018 era San Francisco was about ride sharing. Everyone thought it was "big tech is crushing the world", when really it was "vc's and endowments are going to subsidize your rides for 10 years because they are terrified of missing out". Thanks Yale! Rides were $5 cross town in SF. Those losses? They are still subsidizing them, just by less.

mola 4y ago
Subsidizing your rides while corrupting your democracy by pooring endless cash into lobying against worker rights... It's a pretty heavy price.
- joshe 4y ago
  Another big myth is that money is stopping all your ideas from being accepted. The truth is that you haven't convinced people. This is true even for entirely correct ideas. None of those were going to pass anyway, so it's no price at all.
  - mola 4y ago
    Huh? Worker right exist and codified in law, Uber spent millions if not billions in lobbying to get them changed all over the world.

singularity2001 4y ago

As much as I dislike Uber, $27B is nothing if it succeeds in monopolizing any aspect of transportation.

alexb_ 4y ago
Is it monopolizing transportation, or is it monopolizing driver/rider incentives?