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

bloomberg.com

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

#121

Post by allenz »

staticautomatic wrote: post #58
saas_co_de wrote: post #12

Earlier quoted context omitted.

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…

I don't think any Uber investors can be characterized as smart, even if they have made or end up making money.

Hindsight is always 2020.

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

#122

Post by gaius »

ianai wrote: post #38

Anecdotally, Uber seems to have a large foot print. If it were to fail I wonder how much the economy would be affected? Ie would it start an end of much of the sharing economy - and thus trigger some market corrections?

LOL if Uber disappeared tomorrow you would get the same driver in the same car on Lyft or another app and the day after that would have forgot Uber ever existed.

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

#123

Post by aaavl2821 »

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...

Very interesting situation they are in. Part of me wonders if the negative press coverage is driven in part by the investors losing confidence in management's business acumen (vs ethics / culture), and using the press to push travis and others out

TO my understanding (probably not a full understanding), Uber's business model to date has always been predicated on subsidizing cheap fares and wages that at least keep lots of drivers around. The idea was at some point this would be sustainable and the subsidies would go away. It is unclear now whether such a point exists

Uber could cut costs, ie massive layoffs, but imagine what that would do to its talent base. Who would stay at uber amid massive layoffs when the hiring market is so strong?

THey could try to improve unit economics by charging higher fares or squeezing drivers further, but it is unclear how much more they could squeeze drivers, and if fares rise materially, a lot of their business goes to lyft or goes away entirely.

i rarely used uber when i was in NYC or non-SF places in CA. in SF uber might still be viable because public transportation is so terrible, but in many other cities uber could disappear and people wouldnt miss it all that much

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

#124

Post by ErikVandeWater »

TsomArp wrote: post #61

I am sorry, but I don-t understand why they lose so much money. They take 30 % of all trips, they don-t have cars, they don-t pay salaries to drivers. Is it the infrastructure so expensive?

Probably most of there losses are explained by markets they are trying to develop and also expansion into areas where they do not yet have drivers. I can't imagine the cost would increase too much going forward - it's essentially the same as the cost of delivering pizza, and pizza isn't too expensive, and riders can pool, so it should be below the cost of pizza to deliver a person. And once people start giving up cars for Ubering, pooling will become much more efficient.

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

#125

Post by jsonne »

xbzbanna wrote: post #109
wpietri wrote: post #87

Earlier quoted context omitted.

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 positio…

Offerings like Uber Pool and Lyft Line are the future of the business and depend entirely on economies of scale. Putting multiple paying passengers in the car at once and reducing driver downtime completely changes the economics, but only if there is a high density of riders and drivers. Edit: There are two possible stories here about Uber and Lyft's losses, and we can't tell which is right from the outside. 1. Uber…

The problem though is that they led the way by breaking down all the regulatory barrier to entries. Whats to stop anyone from starting a ridesharing company tomorrow?

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

#126

Post by wpietri »

xbzbanna wrote: post #109
wpietri wrote: post #87

Earlier quoted context omitted.

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 positio…

Offerings like Uber Pool and Lyft Line are the future of the business and depend entirely on economies of scale. Putting multiple paying passengers in the car at once and reducing driver downtime completely changes the economics, but only if there is a high density of riders and drivers. Edit: There are two possible stories here about Uber and Lyft's losses, and we can't tell which is right from the outside. 1. Uber…

True, but that doesn't necessarily make a company hard to start. There are a zillion niches in transport that could be profitable places to get traction. Uber Pool and Lyft Line might be the future of cheap transport, but as Uber itself shows, you can have a decent business just at the high end of the market. There are several companies in the rides-for-kids department. Taxis do a significant business in hospital-specific transport, both of patients and of urgent medical delivery.

To start a rideshare company, you only need to do reasonably well in one segment in one geographic market. Then you have a basis for expansion into other areas, other segments. Contrast this with a search engine, where people really expect you to be good for everything and covering the entire internet.

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

#127

Post by Marazan »

philwelch wrote: post #103
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?

If Uber had to, they could flip the profit switch. They haven’t chosen to because they’re reinvesting in growth, but if it was an existential question they could survive in the short term.

Reinvesting for growth is a terrible euphemism for subsiding taxi fares.

When they flip the switch they become more expensive that a regular mini-cab. Customers will leave in droves, drivers will leave in droves. There s no loyalty to a middleman.

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

#128

Post by aaavl2821 »

wpietri wrote: post #87
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…

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 positio…

or worse, the next webvan

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

#129

Post by aetherson »

hrasyid wrote: post #78
aetherson wrote: post #24

Earlier quoted context omitted.

So remember that it's not that they burned $1.5B this quarter; they burned $3.5B (net revenue of $2B, $1.5B loss). If their average employee costs them $500,000 a year (surely a generous estimate), then that's $125k per quarter. A $2B spend on salaries would suggest then that they had 16,000 employees (not counting drivers, who aren't part of this equation -- they're the difference between the $9.7B "gross bookings"…

How about driver bonuses? Would those count as expenses, pr as the difference between gross bookings and net revenue? I know sometimes (especially in new markets) Uber let drivers keep 100% and then add bonuses on top of that.

I believe that bonuses and other incentives, to drivers and passengers, are the source of a huge amount of expenses and are counted out of the $2B net revenue, not included in the difference between bookings and revenue.

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

#130

Post by ChuckMcM »

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…

I generally agree with this, however if Softbank easily fills their tender offer I wonder if it puts a crimp in the IPO plans. Lets say that Softbank's tender is filled with a bunch of executives and Kalnick contributing their shares to get a payoff (shades of Groupon's last raise before going public). What does that look like to potential investors on the roadshow? How much bump will they need to be 'promised' before they subscribe?

No matter what I think Uber will remain a big part of the unicorn bubble story going forward.

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