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Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

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Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#61

Post by emodendroket »

mseebach wrote: post #37
emodendroket wrote: post #16

Earlier quoted context omitted.

That's not really how it's "supposed to" work. It's called predatory pricing and the most ardent free-market defenders claim it doesn't exist because it's economically irrational (check out the contentious discussion and Frankenstein-like text of the Wikipedia entry on the topic).

> most ardent free-market defenders claim it doesn't exist Yes, and the people on the other side of that debate are perfectly reasonable, dispassionate truth-seekers.

Do you feel I've unfairly presented someone's position? I don't agree with it but I think I have presented their case reasonably. Unless your objection was to my claim that they are "ardent defenders of the free market," but I think that is a reasonable characterization of the Adam Smith tie types.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#62

Post by sfifs »

Animats wrote: post #10

"Uber released new financial data this week, showing full year 2017 GAAP operating losses of $4.5 billion, and an operating margin of negative 61%." Finally, Generally Accepted Accounting Principles numbers from Uber. And they're awful. Lots of startups whine about having to produce GAAP numbers (all US public companies have to) because they can't exclude "extraordinary expenses". But GAAP numbers are real, not "earn…

No one in the finance or investment industry I know sets much store by GAAP numbers which has lots of weird quirks [1] and isn't really helpful understanding the business.

From what I read off the reported numbers, they made about a billion on 11 billion on collections above the line. Excluding R&D and depreciation, they spent about 1.2 billion recurring or 1.5 billion all in. That doesn't sound like a bad place for the business that's close to tripling over a few quarters to be at all.

[1] https://www.bloomberg.com/view/articles/2018-01-17/if-everyo...

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#63

Post by emodendroket »

mseebach wrote: post #34
EpicEng wrote: post #20

Earlier quoted context omitted.

Capitalism is not "supposed to be" a race to the bottom and then the emergence of a single, monopolistic entity. That's far too simplistic. Price and value are a huge component of capitalism, yes, but the general idea isn't "price below what is sustainable by taking in massive amounts of funding until all of your competitors are sunk and then increase prices."

There's nothing about this that will allow a single, monopolistic entity to emerge. There are probably hundreds of "Uber-ripoff" apps out there by now. Sure, as long as someone is willing to pour VC money into it and give people subsidized rides, sure, Uber can kill off contenders and stay dominant. But the second Uber starts raising prices to extract monopoly profits, someone else steps in and undercuts them. You ca…

That's essentially the argument NC has presented for why Uber is not sustainable.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#64

Post by emodendroket »

moduspol wrote: post #49
Jasper_ wrote: post #30

Earlier quoted context omitted.

> But it's been years now and they've got drivers, so they can't possibly be paying too far below market rate. Why do you say that? It's well-known that they've toyed in every possible way with driver rates, including showing different rates to the consumer and the driver in an attempt to hide lower-than-market-rate wages.

They still have the drivers. I'm not even endorsing it--but even at worst, that means drivers are subsidizing the ride prices, not investors. I don't think they are, though. If they were, they'd be having trouble keeping drivers working and we'd see complaints about long waits and unavailability.

If the prices they have are too low to pay the drivers and maintain a profit then the drivers are not the party subsidizing anything.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#65

Post by 111_1_111 »

clairity wrote: post #11
hari_seldon_ wrote: post #7

Earlier quoted context omitted.

Agreed. The dominant strategy seems to be to undercut competitors until they are driven out of business, and then you can raise prices. However, raising prices then gives opportunity for a new ride-sharing service to come in and say that they can compete by offering lower prices for a period of time...

yes, that's how capitalism is designed to work. the window in which you can make outsized profits is meant to be temporary so companies can't just rest on their laurels. it's beautiful when it works.

Capitalism isn't designed. It's just the natural state of the world.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#66

Post by bunderbunder »

MediumD wrote: post #52
maxxxxx wrote: post #40

Earlier quoted context omitted.

Yes, they are a pure commodity.

Sure, but we need commodities and there are tons of profitable commodity businesses. If Uber is able to deliver ride cheaper than everyone else, they can make a ton of money, and the logistics and scheduling competencies can be applied to other verticals. That being said, I'm still pretty bearish on Uber's longterm success, and their current numbers do look pretty bad.

> If Uber is able to deliver ride cheaper than everyone else, they can make a ton of money.

More specifically, if Uber is able to deliver rides cheaper than everyone else, at a cost to them that is even cheaper than that, they can make a ton of money. If it's the other way around, they lose a ton of money instead.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#67

Post by moduspol »

emodendroket wrote: post #64
moduspol wrote: post #49

Earlier quoted context omitted.

They still have the drivers. I'm not even endorsing it--but even at worst, that means drivers are subsidizing the ride prices, not investors. I don't think they are, though. If they were, they'd be having trouble keeping drivers working and we'd see complaints about long waits and unavailability.

If the prices they have are too low to pay the drivers and maintain a profit then the drivers are not the party subsidizing anything.

The prices are verifiably not too low to pay the drivers because they do pay the drivers at the prices they're using.

If the drivers are being paid below market rate and still driving for them, then they are the ones subsidizing.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#68

Post by emodendroket »

moduspol wrote: post #67
emodendroket wrote: post #64

Earlier quoted context omitted.

If the prices they have are too low to pay the drivers and maintain a profit then the drivers are not the party subsidizing anything.

The prices are verifiably not too low to pay the drivers because they do pay the drivers at the prices they're using. If the drivers are being paid below market rate and still driving for them, then they are the ones subsidizing.

I don't think you understand. Uber loses money on every ride. The only reason they can set such low prices is they're burning through investors' money.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#69

Post by mseebach »

emodendroket wrote: post #61
mseebach wrote: post #37

Earlier quoted context omitted.

> most ardent free-market defenders claim it doesn't exist Yes, and the people on the other side of that debate are perfectly reasonable, dispassionate truth-seekers.

Do you feel I've unfairly presented someone's position? I don't agree with it but I think I have presented their case reasonably. Unless your objection was to my claim that they are "ardent defenders of the free market," but I think that is a reasonable characterization of the Adam Smith tie types.

You've misrepresented the conflict as being one-sided, when it's not. There's a real difference of opinion and analysis, and plenty of "ardency" on both sides.

Re: Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017

#70

Post by mseebach »

emodendroket wrote: post #63
mseebach wrote: post #34

Earlier quoted context omitted.

There's nothing about this that will allow a single, monopolistic entity to emerge. There are probably hundreds of "Uber-ripoff" apps out there by now. Sure, as long as someone is willing to pour VC money into it and give people subsidized rides, sure, Uber can kill off contenders and stay dominant. But the second Uber starts raising prices to extract monopoly profits, someone else steps in and undercuts them. You ca…

That's essentially the argument NC has presented for why Uber is not sustainable.

In that case they make very bad arguments, because such an equilibrium would be expected to be quite stable (although Uber might not be part of it).
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