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Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

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Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#181

Post by colechristensen »

orthoganol wrote: post #126
nharada wrote: post #4

Presumably this is intentional -- Uber could raise prices and make more money, but right now they're choosing to keep prices very low in order to undercut Lyft and the cab companies with the assumption that having a monopoly will return more profits in the future. At least anecdotally, here in SF Lyft is almost always more expensive than Uber.

I think almost certainly their profitability is dependent on a future of driverless cars, and I'm sure that's what they are pitching investors. Fearfully, since their survival means going driverless and they are now losing $800 million a quarter, they will race to get driverless cars on the road, it will be rushed, and it could be reckless. I'm thinking the two driverless cars filmed blowing red lights in SF recently…

Reckless and non-viable in much of the world. Nobody is going to get an autonomous car working in a winter climate for a long time. Lines on the road can't be seen, there are potholes, driving through deep piles of snow are common, communicating with other drivers and accomidating and anticipating their actions in snow narrowed streets is necessary....

There are plenty of times of year where I'd be wary trusting a human driver from the bay area in a Minneapolis snow storm much less a computer designed by them. I can see how it would be easy not being able to imagine difficult road conditions when you spend your whole life in a place where the worst weather is a tiny bit of rain.

Multiple instances of running red lights right when they start testing? To me that says driverless cars are decades away and some people are so optimistic that they aren't going to see it before there are several tragedies and driverless cars are legislated away.

There are lots of very common driving mistakes that are orders of magnitude more common than stopping for a red light.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#182

Post by barney54 »

jpalomaki wrote: post #127
nharada wrote: post #4

Presumably this is intentional -- Uber could raise prices and make more money, but right now they're choosing to keep prices very low in order to undercut Lyft and the cab companies with the assumption that having a monopoly will return more profits in the future. At least anecdotally, here in SF Lyft is almost always more expensive than Uber.

Would the monopoly plan really work? Is there something that would prevent competition from reappearing when prices are raised? At least from customer perspective it would be pretty easy to use couple of apps and shop between different providers. For drivers this might be of course more difficult, since Uber can use contracts and other mechanisms to prevent them from working with other providers.

This hits the nail on the head with respect to the monopoly argument. There is plenty of room for other companies to enter the market is Uber jacks up prices.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#183

Post by cstejerean »

animex wrote: post #167

Uber will be a dead Unicorn in the medium future. They've got too many legal pressures, competitors with native advantages (i.e. the automakers), and their expansion plans have them overextended. Here in Edmonton, AB, Canada, regulatory changes have pushed the Uber prices to almost 2x during non-surge times over regular taxis. Taxi's have stepped up. Local competitors have sprouted. Carshares are abounding. It's all…

What I love about Uber is that I can use the same service pretty much everywhere I travel. I don't see them dying anytime soon. They have huge mind share at the moment and are better funded than any competitor. At a minimum Uber can pivot into being a front-end for these other players, providing a unified booking and payment experience.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#184

Post by Cyph0n »

eridius wrote: post #169
Cyph0n wrote: post #144

Earlier quoted context omitted.

That makes sense. It would be really helpful if the user is notified if an authorization hold is required for the next ride, though.

An authorization hold should happen for all rides, but it's normally not very large. The whole point of it is so you can't get a ride and then have their charge fail because you don't actually have any money. Any company that provides a service before payment can be expected to do the same thing (e.g. basically any company that's part of the gig economy). The perfect authorization hold is one that's for the exact amo…

It was my first ride, so it was probably an anti-fraud measure. Still, a simple notification like "we will be charging you $25 to verify your card" would have been great.

Interestingly, I use Uber semi-regularly, and they don't hold anything. They probably only did it for the first ride.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#185

Post by guiambros »

antiviral wrote: post #91
joatmon-snoo wrote: post #80

Earlier quoted context omitted.

Took me 30 seconds on the FTC website to find it: https://www.ftc.gov/tips-advice/competition-guidance/guide-a... Can prices ever be "too low?" The short answer is yes, but not very often. Generally, low prices benefit consumers. Consumers are harmed only if below-cost pricing allows a dominant competitor to knock its rivals out of the market and then raise prices to above-market levels for a substantial time. A firm…

From the same FTC page: Pricing below your own costs is also not a violation of the law unless it is part of a strategy to eliminate competitors, and when that strategy has a dangerous probability of creating a monopoly for the discounting firm so that it can raise prices far into the future and recoup its losses. In markets with a large number of sellers, such as gasoline retailing, it is unlikely that one company c…

The key part is "...has a dangerous probability of creating a monopoly for the discounting firm".

That's not the case here. I don't see Uber creating a monopoly in any way. If they raise prices to unreasonable levels (i.e., more than people used to pay for regular cabs), people will go to Lyft, Juno, or the next ride-hailing startup. If there's no competitor remaining, new ones will show up. Or regular cabs will be back.

IMO, the endgame for Uber is not to raise prices; it is to reduce costs. They're betting the farm on driverless cars.

Not too different than Amazon with retail. Amazon doesn't need to charge more than the local retailers they've put out of business; they just need to have a lower cost structure.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#186

Post by paulcole »

tomc1985 wrote: post #96
jlarocco wrote: post #29

Earlier quoted context omitted.

That's such a terrible strategy I can't believe that's really what they're doing. The short term problem is that they can't burn through money long enough for it to work. The barrier to entry to create an Uber or Lyft competitor is very low - anybody with a car and a laptop can create a viable Uber competitor. Nobody's doing it because Uber, Lyft, and taxis are everywhere, but when there's only Uber, and they're sudd…

> anybody with a car and a laptop can create a viable Uber competitor It's a bit more complicated than that...

No, you don't understand. He's one of the guys who can make Twitter in a weekend.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#187

Post by danielpatrick »

paulddraper wrote: post #175
animex wrote: post #167

Uber will be a dead Unicorn in the medium future. They've got too many legal pressures, competitors with native advantages (i.e. the automakers), and their expansion plans have them overextended. Here in Edmonton, AB, Canada, regulatory changes have pushed the Uber prices to almost 2x during non-surge times over regular taxis. Taxi's have stepped up. Local competitors have sprouted. Carshares are abounding. It's all…

They still have the momentum. This isn't a start up trying to figure out how to make money (Twitter) or a company that can't/won't change (Blackberry). This is a company making money that is pursuing a blitzkrieg on the industry. They can sit back any day and rake in billions. I agree there isn't a high entry barrier, but I don't think they've lost the first-to-market advantage.

The question is whether they will just be able to sit back and take in the billions one day.

I have always looked forward to self-driving car networks because of what I perceived to be their ultra-competitive and ultra-low margin nature.

Then two years ago everyone started talking about an Uber monopoly and I got super upset. Are we seriously seeing another industry ultra centralize due to technology?

But I'm beginning to suspect that this may be a massive miscalculation on the part of Uber and its investors. Maybe it is a low margin, highly competitive industry and Uber will be remembered as that one company that subsidized everybody's rides for a few years until it just faded into the background.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#188

Post by Pyxl101 »

antiviral wrote: post #6

Uber is making the rest of us in SV look terrible. 1. Collect a huge pile of money at sky-high valuations from those who really should know better. 2. Ignore any sensible unit economics and undercut local taxi/transport services until those small businesses go bankrupt since they don't have Uber's money pile. 3. Evade local regulations that everyone else follows in the name of 'innovation' even though the reality is…

> 3. Evade local regulations

Could you share some specific information to substantiate this?

I frequently hear this statement on Hacker News, and (as far as I can recall), every time I've asked for a source or evidence for the claim, I have not gotten a satisfactory answer.

Black car services where you arrange pickup with a specific driver ahead of time have always been regulated differently than taxis. Uber has cars that operate as taxis, and they're properly licensed.

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#189

Post by JonFish85 »

paulddraper wrote: post #175
animex wrote: post #167

Uber will be a dead Unicorn in the medium future. They've got too many legal pressures, competitors with native advantages (i.e. the automakers), and their expansion plans have them overextended. Here in Edmonton, AB, Canada, regulatory changes have pushed the Uber prices to almost 2x during non-surge times over regular taxis. Taxi's have stepped up. Local competitors have sprouted. Carshares are abounding. It's all…

They still have the momentum. This isn't a start up trying to figure out how to make money (Twitter) or a company that can't/won't change (Blackberry). This is a company making money that is pursuing a blitzkrieg on the industry. They can sit back any day and rake in billions. I agree there isn't a high entry barrier, but I don't think they've lost the first-to-market advantage.

> They can sit back any day and rake in billions

I don't know if this is accurate. They're fending off lawsuits pushing them to recognize their drivers as employees, their prices are artificially low (in the sense that it's subsidized by VC money), and they're racing both cab companies and car companies at once (if Tesla/GM/Ford gets autonomous cars first, who needs Uber?).

At a ~$70B valuation, they have no margin for error. Their only realistic positive option at this point is to IPO. Right now, they're valued higher than Ford ($50B), GM ($55B) and Tesla ($33B), and currently Uber is reliant upon them (and others) to manufacture the cars they rent to people; if they are beaten to autonomous cars, they have no reason to exist.

This is why I think Uber is in a tough spot; they've raised a ton of money at an enormous valuation, and have to somehow convince the public markets that they're worth it. Whether they can do it, who knows? I've been wrong on these things before (Zynga and KING seemed like obvious flops, but the public bought into them).

Re: Uber's Loss Exceeds $800M in Q3 on $1.7B in Net Revenue

#190

Post by paulddraper »

danielpatrick wrote: post #187
paulddraper wrote: post #175

Earlier quoted context omitted.

They still have the momentum. This isn't a start up trying to figure out how to make money (Twitter) or a company that can't/won't change (Blackberry). This is a company making money that is pursuing a blitzkrieg on the industry. They can sit back any day and rake in billions. I agree there isn't a high entry barrier, but I don't think they've lost the first-to-market advantage.

The question is whether they will just be able to sit back and take in the billions one day. I have always looked forward to self-driving car networks because of what I perceived to be their ultra-competitive and ultra-low margin nature. Then two years ago everyone started talking about an Uber monopoly and I got super upset. Are we seriously seeing another industry ultra centralize due to technology? But I'm beginni…

> I have always looked forward to self-driving car networks

As great as that would be, those are still a decade away from common use, probably much more.

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