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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

#81

Post by ProAm »

JumpCrisscross wrote: post #10

Uber had $6.6bn on hand at the end of June [1]. That means they are down to $5.1bn. Absent cost-cutting, that implies a 9 to 12 month runway. Even if SoftBank injects $1bn, that could only mean a few months’ runway. A large fine in the Waymo case [2] could literally bankrupt them. [1] https://venturebeat.com/2017/08/23/uber-is-still-burning-cas... [2] https://mobile.nytimes.com/2017/11/29/business/waymo-uber-tr...

Honestly if they need to make money, they can lay off a ton of staff, and license their logistics software to a lot of companies. It wouldn't be what their game plan has been, definitely a severe pivot but they would be a money printing machine for years to come.

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

#82

Post by tragic »

bob_theslob646 wrote: post #62

> Uber Technologies Inc.’s net loss widened to $1.46 billion in the third quarter, according to people with knowledge of the matter, as the ride-hailing leader struggled to fend off competition, legal challenges and regulatory scrutiny. "according to people with knowledge of the matter.." How is reporting like this legal? Is this not speculation? It baffles me that no fact checking/ benchmarking exists for such a maj…

This sort of formulation is extremely common in all kinds of news reporting. Journalists frequently have recourse to anonymous sources - so frequent that there are strong journalistic ethical injunctions against exposing such sources.

Deep Throat was 'a person familiar with the matter'.

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

#83

Post by misun78 »

ilamont wrote: post #77

What's to stop Uber from slowing the burn via an increase in base prices? People would still use Uber as long as it's A) more convenient than other transportation B) better quality rides than cabs and C) just a little cheaper than cabs. There are surely other forms of revenue they can spin up too, but this seems to be pretty straightforward, especially in markets where they have already decimated local taxi firms.

Increased competition. Lyft is burning through money at an unprecedented rate to catch up with Uber given that they smell blood this year and investors ala Google are willing to subsidize the burn. At some point, this has to stop but 2017 does not seem to be the year.

Source: Lyft pushes back profitability after increased burn - https://techcrunch.com/2017/11/14/unpacking-lyfts-projected-...

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

#84

Post by lostboys67 »

swimfar wrote: post #54
sandworm101 wrote: post #30

Earlier quoted context omitted.

250k may well be an average, but not the type of average that matters. The few high-pay people warp the average. They will not be culled before an IPO as doing so will reduce confidence. Uber needs to keep its headliners. They can only cut from the plebs costing in the 50-100K range. So either they need to fire 4x as many people, or a cull won't solve the problem.

I doubt that there's a single full-time employee (in the US) that only costs them 50k/year. Total overhead costs are a lot higher than the employee's salary. I have no idea what the distribution of salaries look like, so this doesn't necessarily invalidate your point.

rule of thumb is 3x your salary is your cost to employer

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

#85

Post by scott00 »

StevePerkins wrote: post #16
albertgoeswoof wrote: post #6

It is strange that private investors are willing to fund my discounted travel.

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…

The barrier to entry is that they're building a marketplace. Building a marketplace from scratch is hard: no driver wants to drive for a network with no riders, and no riders want to ride a network with no drivers. To make it work you basically have to pay drivers to drive empty cars until your customer acquisition gets enough riders that the market is self-sustaining. That requires a lot of capital. If you follow that game plan in one market against a national monopolist, they'll cut their pricing in your market to drive you out of business. So really, you need enough capital to mount a credible attack in enough markets that the monopolist is better off accepting duopoly profits than burning what it would take to put you out of business. That's a lot of capital to raise and a lot of hassle, and you don't even get monopoly profits if you win. As a result, you'd probably have trouble raising the money. That's the theory anyway.

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

#86

Post by astrodust »

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…

That seems like an absurdly high number of employees for what's basically a taxi company, especially considering their drivers aren't employees.

That's roughly as many employees as Apple had in 2005, a company that was making laptops, desktops, servers, wireless routers, portable audio players, and entire operating systems.

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

#87

Post by wpietri »

ihsw2 wrote: post #55
BinaryIdiot wrote: post #51

Earlier quoted context omitted.

Yeah I am really perplexed with Uber's business model. They can't survive much longer and they can't keep getting injections of cash to stay alive, can they? It's rumored they'll IPO in 2019, if I remember correctly, which means they have to somehow survive until then to at least reach that stage. Are they planning to raise prices? Cut employees? What are they planning on doing here?

The idea is to drag the entire ride hailing industry underwater long enough to drown out competitors, and the trick is to do this without drowning themselves in the process. This is the nature of "predatory" pricing. There is something to be said for volume and if a couple competitors die in the process then Uber's volume can only go up. Unfortunately their competitors have found a variety of ways to keep from being…

Even if they manage to kill their competition -- and I'm not expecting they will -- I don't understand what their endgame is. I don't see what their moat is. Ridesharing companies are not hard or expensive to start. They'll have a hard time extracting monopoly rents, and there isn't much of an economy of scale they can reap.

And once autonomous cars become part of the picture, I think they're in an even worse position. Suddenly they're not competing just against would-be moguls. Now they're up against the car companies, who have strong brands, deep pockets, and the ability to make cars at cost. Imagine, for example, BMW extending their leasing business to on-demand car use. We also have existing car rental companies that will be eager to get in on the action. And that's not counting the zillion other outfits with strong brands and a taste for expansion. Apple, for example. Virgin. Amazon.

I just don't see how this ends well for them. At best, I think 10 years from now they'll be the next Groupon: the hot startup everybody everybody loved but now nobody talks much about and is trading at a fraction of their peak valuation.

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

#88

Post by JumpCrisscross »

misun78 wrote: post #79
ihsw2 wrote: post #55

Earlier quoted context omitted.

The idea is to drag the entire ride hailing industry underwater long enough to drown out competitors, and the trick is to do this without drowning themselves in the process. This is the nature of "predatory" pricing. There is something to be said for volume and if a couple competitors die in the process then Uber's volume can only go up. Unfortunately their competitors have found a variety of ways to keep from being…

"controlled expenditures through higher pricing and "friendlier" demeanor" - Assuming this refers to Lyft, Lyft's expenses compared dollar to dollar are on-par if not worse than Ubers - https://techcrunch.com/2017/11/14/unpacking-lyfts-projected-... As long as Uber can keep the cost per ride lower than other competitors, it just needs to wait for the burn to end faster on the competitors side before turning break-eve…

> As long as Uber can keep the cost per ride lower than other competitors, it just needs to wait for the burn to end faster on the competitors side before turning break-even

Uber have joined loss leading with scale, a combination that works if one has access to an endless spigot of money. The scandals have impacted Uber's fundraising. Time for eyes to match stomach.

I predict, in addition to lay-offs, we'll soon see more Didi-style hand-offs of offshore ride-sharing markets. Southeast Asia to Grab et al seems reasonable.

Disclaimer: this is not investment advice. Do not buy or sell anything based on this Internet comment.

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

#89

Post by philsnow »

misun78 wrote: post #79
ihsw2 wrote: post #55

Earlier quoted context omitted.

The idea is to drag the entire ride hailing industry underwater long enough to drown out competitors, and the trick is to do this without drowning themselves in the process. This is the nature of "predatory" pricing. There is something to be said for volume and if a couple competitors die in the process then Uber's volume can only go up. Unfortunately their competitors have found a variety of ways to keep from being…

"controlled expenditures through higher pricing and "friendlier" demeanor" - Assuming this refers to Lyft, Lyft's expenses compared dollar to dollar are on-par if not worse than Ubers - https://techcrunch.com/2017/11/14/unpacking-lyfts-projected-... As long as Uber can keep the cost per ride lower than other competitors, it just needs to wait for the burn to end faster on the competitors side before turning break-eve…

even if lyft's burn-to-revenue ratio is higher, their burn is still lower that uber's, and it's going to cost a lot fewer incremental dollars to prop up lyft's burn than uber's for a few years.

some interested parties (waymo/alphabet) might be happy to foot that bill.

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

#90

Post by Eridrus »

krrrh wrote: post #53
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…

> we'll likely see numerous other competitors emerge to compete on price I've been beating this drum for years. One interesting point is that competitors aren't only competing on price, and there are a lot of ways to cut into Uber's market. Juno [1] offers an example that focused on a tight geography (Manhattan), and became popular by paying drivers more, scooping the highest rated drivers from Uber, and offering con…

> Expect this to increase as people become more used to hailing cars from inside of their maps applications which act as aggregators.

I feel like the prices I get from within Google Maps are both vague and higher than the prices I get from opening the actual apps, so I never actually use the Google Maps integration and just end up checking both apps, which is pretty annoying.

I think the Maps integration is basically a customer acquisition tactic, not something they expect most people to actually use.

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