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Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

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Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#31

Post by aetherson »

sjm-lbm wrote: post #22
StevePerkins wrote: post #16

Earlier quoted context omitted.

I seriously don't understand the endgame here. Apparently, it WOULD BE possible to completely kill off the legacy taxi industry given 10 years or so of artificially subsidized pricing. So I understand the concept of disrupting a previous oligarchy, replacing it with a new monopoly, and then profiting through rent seeking. But where are the barriers to entry that would allow Uber to solidify as that new monopoly? Ther…

I honestly think the original vision was something similar to Amazon: bleed money when they are an online bookstore, make it all back when they swing for the fences and go for replacing all of retail. Likewise, Uber might lose money as a taxi service, but the idea would be to make it back in self-driving tech that replaces all transportation with 5 lanes of self-driving Ubers zipping about in all directions. The prob…

That was absolutely not the original vision.

The original vision was that they would somehow be a profitable concern as a taxi company despite the total lack of barrier to entry because, um, reasons. That they could create an app that was hard to compete with. In all fairness, it wasn't super clear seven or so years ago that there would be so relatively little innovation in the app after the core business of hailing happened.

Then, they would expand into being a logistics company. They used to talk about this all the time. Taxi -> logistics, Uber for things. Uber Eats was supposed to be part of this, and they did a bike courier service in NYC that was supposed to be part of it and several other experiments.

Then, when self-driving tech came along, and they were probably thinking like mid-2020's (hardly anyone in 2010-2011 believed that self-driving would go as fast as it did), their vast profitable concern would be well-positioned to get even bigger.

That was the original narrative. It wasn't hidden, they talked about it a lot. As little as about two years ago, their redesign was heavily concerned with positioning themselves as a logistics company.

But what happened is:

1. They've never been more than razor-thin profitable in certain very favorable markets as a taxi company, and obviously overall are grossly unprofitable as a taxi company.

2. Nobody in the entire world wants their logistics business. The only company who would be even remotely interested in it is Amazon, and Amazon laughed and said, "Nothing about your taxi business makes you well-suited to do logistics, we'll just build our own version kthx."

3. So now they spun up a self-driving car program out of nothing a couple of years ago and have desperately pumped cash into it. Hoping that they can somehow catch up with companies that are both substantially better-resourced than they are and who have multi-year head-starts on them, or, more cynically, that they can play some kind of pixie dust story into an IPO and dump their losses on dumb money.

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#32

Post by [deleted] »

__sha3d2 wrote: post #29
chollida1 wrote: post #2

Better source, and one that the article references: https://www.bloomberg.com/news/articles/2017-11-29/uber-s-th... At this point, two things are clear to me: 1) Uber will IPO, there's just oo much money and influence behind it to stop that. 2) I'd be really worried if I was an employee about my options and also about my job. Employee's now ahve two large worries hanging over their heads..... What about my job and wh…

> And to top it all off, the biggest thing driving their valuation recently, self driving cars, appears to be in serious jeopardy, can anyone make a credible case of Uber having self driving fleet in the next 5 years? Uber currently sends teams to major cities all over the world to build maps for self driving cars. They outfit cars in those cities with 6 figure camera rigs and enable 'passive collection', where maps…

[deleted]

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#34

Post by adjkant »

chollida1 wrote: post #2

Better source, and one that the article references: https://www.bloomberg.com/news/articles/2017-11-29/uber-s-th... At this point, two things are clear to me: 1) Uber will IPO, there's just oo much money and influence behind it to stop that. 2) I'd be really worried if I was an employee about my options and also about my job. Employee's now ahve two large worries hanging over their heads..... What about my job and wh…

When looking at SNAP vs UBER, I think that this negative publicity will stop that first positive bump. Each negative scandal after will hit their stock hard, along with each quarter report. I do agree it will happen, but I think most everyone will see through it.

Given their burn rate and their IPO scheduled for 2019, they will still struggle to get there even with the incoming round. At this point it's hard to find any winners besides Lyft.

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#35

Post by apocalyptic0n3 »

mtremsal wrote: post #4

Uber has raised more than $11B over the years. Does anyone know how much of that is left and what their runway is? edit: runway to IPO I meant

Apparently they are at about $5.1B cash-on-hand, not including the potential $1B SoftBank investment. So they have about a year of runway right now.

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#36

Post by aetherson »

mrgordon wrote: post #26
albertgoeswoof wrote: post #18

Earlier quoted context omitted.

Are Uber's costs really in the tech space? It's a complex tech operation for sure, but I wouldn't have thought they could make up much of the 1.5bn USD if they fired a bunch of developers. These bulk of these costs must be in marketing, customer acquisition and discounted fares, right?

They have around 12,000 employees according to Wikipedia (and a few other sources show a similar figure). If we figure the average employee is 250,000/year in liabilities on the balance sheet (salary + benefits + options/RSUs) then thats $3 billion a year in employee expenses. I don't think $250k is too unrealistic considering the massive capital gains many employees must have on paper as well as the high level of ta…

Don't confuse years and quarters. Their quarterly loss is $1.5B. If we accept a $3B yearly salary cost (I expect it's actually a lot lower, because their 12,000 worldwide employees, I think, include lots of local employees at far-flung cities who probably have very low salaries by silicon-valley-programmer standards), and extrapolate their quarterly loss to a year, then they could cut all of their salaries to 0 and still only reduce their loss from $6B/year to $3B/year.

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#37

Post by LeifCarrotson »

pishpash wrote: post #21
StevePerkins wrote: post #16

Earlier quoted context omitted.

I seriously don't understand the endgame here. Apparently, it WOULD BE possible to completely kill off the legacy taxi industry given 10 years or so of artificially subsidized pricing. So I understand the concept of disrupting a previous oligarchy, replacing it with a new monopoly, and then profiting through rent seeking. But where are the barriers to entry that would allow Uber to solidify as that new monopoly? Ther…

Uber's endgame has been making an Uber of everything (e.g. Uber eats), i.e. a platform for the so-called 'sharing economy.' They obtain this by network effects. That and self-driving cars, I don't know. They're basically an R&D operation funded by investors. It may or may not pan out.

> They're basically an R&D operation funded by investors

No, they're basically a taxi service funded by investors. They served almost $10 billion in rides, and lost $1.5 billion in this single quarter. Other projects, like UberEats and self-driving car R&D are, in comparison, little more than distractions at present. You can buy self-driving companies or restaurants and employ an army of self-driving engineers for a billion dollars a year, and have that be a tiny fraction of those financials.

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#39

Post by adjkant »

thisisit wrote: post #13
hatred wrote: post #5

Earlier quoted context omitted.

I couldn't understand the part about an employee and loosing my job. Are you saying that they won't be able to sell their equity even at a steep discount in 90 days? Even, if they incur a loss of ~30-40% over the current prevailing price; it would still be a fortune. They can easily do that to save on the tax or did you mean something else?

Well, let's use the SNAP example which has been quoted above. They went public earlier this year. With burgeoning balance sheet they have to fire people: https://www.businessinsider.in/Snap-hit-with-more-layoffs-pl...

To be fair, 18 / 2000 is very small and hardly a dent - the layoffs came because they are decreasing the rate of recruiting, which is still notable but is not laying off engineers (yet anyways). If Uber wanted to make IPO and were pressed for money, a slowing of hiring would not be enough.

Re: Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares

#40

Post by hbosch »

saas_co_de wrote: post #12
chollida1 wrote: post #2

Better source, and one that the article references: https://www.bloomberg.com/news/articles/2017-11-29/uber-s-th... At this point, two things are clear to me: 1) Uber will IPO, there's just oo much money and influence behind it to stop that. 2) I'd be really worried if I was an employee about my options and also about my job. Employee's now ahve two large worries hanging over their heads..... What about my job and wh…

An IPO would be the best scenario but it is far from certain. Given the widespread unethical (and probably criminal) activity that was conducted at the highest levels of the company I would say there are even odds that there are some big skeletons in the closet that opening the books would reveal and that is why they have stayed private so long. Why else would Benchmark and others be running for the exits now? If all…

> Given the widespread unethical (and probably criminal) activity that was conducted at the highest levels of the company I would say there are even odds that there are some big skeletons in the closet that opening the books would reveal and that is why they have stayed private so long.

I don't think this can be understated. In the social and political climate of today, it would be hard (I think) for Uber to have a banner IPO. When you look at where we are, with sexual misconduct headlining the nightly news, I feel like Uber would generally like to avoid public scrutiny until the issue is not as hot.

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