281–290 of 559 posts
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When your business is selling $10 for $5 then no, I cannot see a way to turn cash flow positive.
They're not doing that. They got $11.27 in revenue for a cost of $9.65. The loss stems from spending an additional $4.67 on advertising and R&D.
Yes, profitability is a big piece, but Uber is more diversified, in that they have other rev streams - Food Delivery and Freight, which they are ramping up (Focused on growth for now).
Also, by way of partnerships/equity, they have stakes in a lot of different market leaders in other markets/geographies. These companies are further diversified in terms of other rev streams (payments, commerce, food delivery etc).
Not sure how much of that is captured in the valuation.
SDCs (L5) are definitely a ways off in terms of becoming ubiquitous. Companies are doing fixed route or city/geo-fenced testing and for any of these companies to actually get to Uber's scale will take a long time and maybe Uber can acquire/partner with one/more of these before that happens.
Also, if we consider ride sharing as a commodity, Uber benefits from economies of scale as opposed to other competitors who may operate in smaller regions/markets so that's also going in their favor.
All of this is to say, they are definitely focusing on growth for now (which there is a lot of opportunity for), but at a certain point they could probably start becoming profitable by either reducing costs or ramping up prices (in tiny percentages) and still be better than the alternative.
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> can't imagine how Uber is worth anything If the operation doesn't make an economic profit, and if there isn't sufficient moat to defend the operation until it can become profitable, then I agree with you it's not worth anything. But in fact, Uber does have a massive moat -- its network of drivers and riders in thousands of cities around the world. No competitor is even close. It takes tremendous capital expenditure…
>It takes tremendous capital expenditure to build that network What I don’t understand with the gig economy is why the gig workers organize and cut out the platforms. Do the drivers need uber/Lyft? Do renters need Airbnb? Let these companies take on VC build the tech platform, launch, verify the market...then fuck them, leave them holding their own bag while the workers ride off in the sunset. Besides the Founders an…
2016-7: 100% revenue growth, 105% trips, 51% MAPC 2017-8: 40% revenue growth, 40% trips, 33% MAPC (MAPC = active users)
These are sharp drops in the growth rate.
The quarterly revenue data is more worrying - December Quarter 2018 was up only 22% over the previous year. (Page 121) On Page 126 we see that even that revenue increase was subsidised by excess driver incentives, and netting that out the growth was only 17% year on year.
They have tightened things and their adjusted yearly EBITDA loss fell by $800m to $1.65 billion, but has this come at the expense of growth? Or has the growth simply become too expensive to chase? Or are electric mobility devices taking away the shorter distance rides?
And they had a loss of $890 million in the last quarter, and it's hard to see tangible evidence of margin improvement. (P128)
A valuation today of, say, $100 million needs to have net income of, say, $10 billion to be a very real probability relatively soon, or of one much larger later.
At, say, a 20% net margin and 40% growth $10 billion income would take 5 years. But that is a courageous assumption about the growth rate, given the above, and it also assumes significant margin improvement, which will be hard if the marketing spend continues, which itself is required for growth. And pricing is hard because increased prices simply move customers onto other platforms. This is not a winner take all market.
For the model to work Uber Eats growth needs to be maintained for a while, and that's possibility, although I suspect their margins will be sharply squeezed as big brand chains respond. (e.g with Mobi2Go and 3rd party delivery agencies they can roll their own)
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Think about morale at Lyft. You have employees locked in who cant sell for first couple of months. They are seeing their networth plummet everyday.
Should've bought options to hedge.
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> can't imagine how Uber is worth anything If the operation doesn't make an economic profit, and if there isn't sufficient moat to defend the operation until it can become profitable, then I agree with you it's not worth anything. But in fact, Uber does have a massive moat -- its network of drivers and riders in thousands of cities around the world. No competitor is even close. It takes tremendous capital expenditure…
That is so not true. There is no 'moat' whatsoever. No Uber drivers are exclusive. In the US I see tons of cars with Uber AND Lyft stickers on. In SEA it was extremely common the same drivers had the Uber AND Grab app installed (before Uber gave up).
Bing is just a click away from Google.
Hulu is just a click away from Netflix.
My local grocery store is just one block away from a different grocery store.
Exclusivity isn't required to defend a large network. People are creatures of habit, and it would take a big innovation in the service or massive subsidies to dismantle that network.
So... Let me see if I have this straight: 1. Uber is unprofitable and the only way it can become profitable is to get SDC's 2. Uber is significantly (years) behind Waymo in the SDC space. 3. Waymo will launch SDC taxi services first meaning: - When it puts in an order for SDC components no one else is going to be buying in bulk and thus it can have effectively 100% of capacity of these specialized equipment makers -…
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Wow, that many people are ordering delivery McDonald's? Maybe McDonald's should start delivery services in some markets itself then?
They do. Google "mcdelivery" - it's all through south east asia.
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It is going to be competing with other taxi/ride share services with all the cost advantages of SDC vehicles while its competitors are paying human drivers (and have basically no fat to cut from their current pricing) It's going to be a very long time before self-driving cars are cheaper than cheap cars with human drivers. It's very possible that Uber might reach an acceptable level of self-driving capabilities befor…
Huh? How much does a full time driver earn? Let's say $30000 for the sake of argument. A car that is run as a taxi or rideshare service full time will last maybe three years. So that eould mean $90000 for the driver plus around $40000 for a decent car. A mass produced self driving taxi car that costs more than $130000 seems very unlikely.
coworker, works his normal shift five days a week. will uber when he gets off work for two to three hours each day and some on weekends. his claim is over six hundred dollars a week plus he claims fifty four cents per mile on his taxes.
he seems seriously happy with the arrangement. he does mention you get into some sketchy parts of town on occasion and will turn off the app after a drop in one and go live when he is in the clear but he has yet to have an issue. he does not expect to drive forever, he is simply piling away a down payment on a home.
So... Let me see if I have this straight: 1. Uber is unprofitable and the only way it can become profitable is to get SDC's 2. Uber is significantly (years) behind Waymo in the SDC space. 3. Waymo will launch SDC taxi services first meaning: - When it puts in an order for SDC components no one else is going to be buying in bulk and thus it can have effectively 100% of capacity of these specialized equipment makers -…
This isn’t self-evident. Their services are unit profitable in core markets. And additional revenue streams increase the geographies in which they’re organically profitable.