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A very large chunk of GAAP losses are attributable to stock comp expense (a quick and easy way to check cumulative profits/losses is looking at the balance shee
by bedhead 4y ago
A very large chunk of GAAP losses are attributable to stock comp expense (a quick and easy way to check cumulative profits/losses is looking at the balance sheet’s equity section for “accumulated deficit”) which still gets counted as an expense but since it’s non-cash it’s not a drain on whatever the company has raised. If you look at Uber’s last three FY’s, they’ve cumulatively reported losses of about $16 billion, and stock comp has been about $6.5 billion of that. For the vast majority of public companies this isn’t as material but for all these VC-backed, Bay Area-type tech companies they have this systemically dysfunctional culture where they dole out stock and options to no end.
- lacker 4y agoIf stock-based compensation information is made public to investors, what's the problem with it? I don't see why compensating people in stock rather than cash makes it a "systemically dysfunctional culture".
- fshbbdssbbgdd 4y agoI think the right way to handle that in a chart like this would be to include the stock comp on both the “funds raised” and “cumulative losses” columns, or neither of the columns. When you issue stock comp, you are trading dilution for money, just like you are when raising from VCs or doing an IPO. The money is just spent on paying an employee immediately instead of sitting in the corporate treasury for a while. If you include the spending part of the stock comp as a “loss”, but don’t include the creation of that stock as a “raise”, you end up with these nonsensical results.