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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

#101

Post by mseebach »

emodendroket wrote: post #98
mseebach wrote: post #91

Earlier quoted context omitted.

It is (mildy, granted) pejorative in the description of a participant in a debate, especially when only one party is it. Search for the truth is about collecting and reviewing evidence. Being passionate (synonym of ardent) about one side (rather than possibly the inquiry itself) is a bad quality.

I originally wrote "extreme" but thought someone might take offense at the use of such a loaded term. Sometimes there's no winning, I guess.

It's not about offence. I'm not offended. I'm challenging your misrepresentation of a debate.

The idea that predatory pricing not only exists, but is prevalent, is the main plank of the argument that competition doesn't work and wont generally sort out bad behaviour in the market, so lots of people who ideologically need that to be true cling very dearly to that idea. On the other side of the debate are a lot of people with an incomplete appreciation of the complexity of what markets can and can't sort out, especially the pretty non-ideal ones we're stuck with in a world where among other things governments and regulations play, for better or for worse, a non-trivial role.

Lost in this mess is any nuanced discussion of when predatory pricing might and especially might not occur.

And now we're getting to the point. A reasonably free market for taxis (and a such can well include requirements for insurance, background checks and rigorous book keeping) will not allow predatory pricing to occur, and this is trivially easy to show. This does not mean that predatory pricing doesn't or can't exist, just that it certainly can't on a market with these characteristics.

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

#102

Post by moduspol »

alonmower wrote: post #96
moduspol wrote: post #47

Earlier quoted context omitted.

Yep. It does cost money to expand into new geographic areas or markets (like Uber eats). That doesn't indicate that ride prices are subsidized, though.

As I understood it when they enter new markets (and maybe in other cases?) they sometimes end up paying out the drivers more than the rider paid. I personally remember a handful of occasions in SF when they had absurdly low rates for some period of time (like the two dollar rides when UberPool first started) where they were definitely losing money on every ride.

In those cases: Sure, they must have been losing money on those rides. As far as I know, though, the norm across the board is the 25% cut (which I understand is higher at some times).

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

#103

Post by MediumD »

maxxxxx wrote: post #55
MediumD wrote: post #52

Earlier quoted context omitted.

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," They are repeatedly demonstrating that they are not able to do this profitably.

I am not saying they will or won't be able to do it profitably, but saying they won't be profitable because their product is a commodity seems wrong. People need and are willing to paying for commodities, it's a matter of whether or not Uber can execute.

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

#104

Post by maxxxxx »

MediumD wrote: post #103
maxxxxx wrote: post #55

Earlier quoted context omitted.

"If Uber is able to deliver ride cheaper than everyone else, they can make a ton of money," They are repeatedly demonstrating that they are not able to do this profitably.

I am not saying they will or won't be able to do it profitably, but saying they won't be profitable because their product is a commodity seems wrong. People need and are willing to paying for commodities, it's a matter of whether or not Uber can execute.

Agreed. It looks like Uber is not Walmart or Amazon who can thrive in low margin markets though. They are producing huge losses right now.

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

#105

Post by emodendroket »

mseebach wrote: post #101
emodendroket wrote: post #98

Earlier quoted context omitted.

I originally wrote "extreme" but thought someone might take offense at the use of such a loaded term. Sometimes there's no winning, I guess.

It's not about offence. I'm not offended. I'm challenging your misrepresentation of a debate. The idea that predatory pricing not only exists, but is prevalent, is the main plank of the argument that competition doesn't work and wont generally sort out bad behaviour in the market, so lots of people who ideologically need that to be true cling very dearly to that idea. On the other side of the debate are a lot of peop…

Well, I don't think you disagree that much with the folks at this site. Their idea is that Uber may be able to drive competitors out of business with predatory pricing, but they won't be able to keep more competitors from coming back as soon as they raise prices.

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

#106

Post by EpicEng »

emodendroket wrote: post #29
EpicEng wrote: post #21

Earlier quoted context omitted.

Sounds like a terrible idea given that this would just open the door for another company to do the same to them. They don't produce anything novel which can't easily be replicated.

I didn't say it was a good plan.

Sure, I get that it's not _your_ idea

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

#107

Post by TheCoelacanth »

sfifs wrote: post #62
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…

Even the non-GAAP number that they prefer has them losing $2.2 billion. Not exactly a small loss.

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

#108

Post by TheCoelacanth »

Jasper_ wrote: post #28
moduspol wrote: post #9

Earlier quoted context omitted.

Then apparently it is impossible to run a SaaS app connecting drivers and passengers for a ~25% cut of current prices. That seems pretty unlikely. We need to move on from this unsupportable "ride sharing pricing is unsustainable" narrative.

The expensive part of Uber isn't the SaaS app or even the engineers. It's the overhead of running a law-avoiding lobbying business that explicitly seeks out to just do everything as evil as possible. Hell, Uber tried being a predatory car loan business for quite some time, which you would think would be one of the easiest ways to make surefire money, but they lost on that one too: http://www.businessinsider.com/uber-…

I was under the impression the the really expensive part was driver incentives to keep more drivers on the road than is economically sustainable with current levels of rider demand to allow them to grow more quickly.

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

#109

Post by emodendroket »

moduspol wrote: post #100
emodendroket wrote: post #90

Earlier quoted context omitted.

Well, no, the article is about Uber, specifically. If you mean where I said that neither Uber nor Lyft is sustainable, then specifically what I'm referring to is operating with such low prices that rides are money-losers, aiming to raise prices after achieving total market dominance. I do not doubt that ride-sharing is a business model that can make money if prices are high enough to make the business self-sustaining…

> then specifically what I'm referring to is operating with such low prices that rides are money-losers This is meaningless semantics. The business is growing and spending money to expand. That does not mean each ride is not priced profitably, or that each ride does not bring in more money than is spent providing that ride. It's just a more convoluted way of saying the business--at a high level--sells rides and is no…

I am capable of appreciating that such a circumstance is possible, but what I have read leads me to believe that's not what's happening, and instead Uber is charging prices that do not cover their costs, with the hope of achieving monopoly. Earlier series on the subject: https://www.nakedcapitalism.com/2016/11/can-uber-ever-delive...

> By contrast, in the hundred years since the first motorized taxi, there has been no evidence of significant scale economies in the urban car service industry. That explains why successful operators never expanded to other cities and why there was no natural tendency towards concentration in individual markets. Drivers, vehicles and fuel account for 85% of urban car service costs. None of these costs decline significantly as companies grow. As the P&L data above demonstrates, Uber has not discovered a magical new way to drive down unit costs.

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

#110

Post by sfifs »

TheCoelacanth wrote: post #107
sfifs wrote: post #62

Earlier quoted context omitted.

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…

Even the non-GAAP number that they prefer has them losing $2.2 billion. Not exactly a small loss.

Yup. But if you look at the reported P&L, they have grown revenue 2.5X over 6 quarters, held or slightly improved gross margins and grown op ex o slightly less than 2X in the same period. So clearly business is growing and growing healthy with a path to profitability even without invoking "self drive cars"

I've been skeptical of Uber in the past but this performance is very impressive. It's probably not Google/FB P&L level impressive but that's just applying a very stretch benchmark.

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