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Uber opens at $42 per share

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Re: Uber opens at $42 per share

#451

Post by [deleted] »

8ytecoder wrote: post #447
pavlov wrote: post #301

Earlier quoted context omitted.

The Silicon Valley giants don't do options anymore, but RSUs (restricted stock units) which are simply share awards. There's no strike price to worry about, but of course it's a bit of a disappointment if you expected Uber to be a $100B company out of the gate. Still, Uber employees will be happy that they can finally sell those RSU awards (in six months when the lockup expires).

I can’t speak for sure but that’s a little unlikely. RSUs are taxed on vesting. Bad idea when employees can’t sell a portion of it to pay the tax.

[deleted]

Re: Uber opens at $42 per share

#452

Post by pavlov »

8ytecoder wrote: post #447
pavlov wrote: post #301

Earlier quoted context omitted.

The Silicon Valley giants don't do options anymore, but RSUs (restricted stock units) which are simply share awards. There's no strike price to worry about, but of course it's a bit of a disappointment if you expected Uber to be a $100B company out of the gate. Still, Uber employees will be happy that they can finally sell those RSU awards (in six months when the lockup expires).

I can’t speak for sure but that’s a little unlikely. RSUs are taxed on vesting. Bad idea when employees can’t sell a portion of it to pay the tax.

Uber, Airbnb and the rest definitely give RSUs. Details may vary but they may use contracts like “double trigger vesting” where you don’t actually receive the shares until they’re publicly traded.

Re: Uber opens at $42 per share

#454

Post by imajoo »

dasil003 wrote: post #440
imajoo wrote: post #397

Earlier quoted context omitted.

Not OP, but if they weren't doing it before, and just copied Uber, doesn't that show how weak their moat is? The same could happen with autonomous vehicles as well then.

The topic is revolutionary UX not moats.

Ok, if the UX is revolutionary, then what prevents others from copying it? It still seems like the moat for the UX isn't that great.

Re: Uber opens at $42 per share

#455

Post by sfifs »

foobarian wrote: post #439
sfifs wrote: post #402

Earlier quoted context omitted.

Nope. Market share and pricing power in digital advertising comes from user base and targeting capability. As an advertiser, I can reach most of the population in many country through FB/IG and YouTube. Their targeting data is also pretty good. So they claim a lion's share of the market. Also inventory expands as userbase expands and the userbase doesn't really have other options with similar network effects. Uber on…

So basically advertising is less constrained on the upside than transportation. The whole bit about 'they have to pay their drivers' is a red herring - the real constraint is that the price the riders are willing to pay is more constrained / lower than what advertisers are per user.

That's part of it. The other part of it is that digital advertising business models turn out to be close to zero cost. There's very little "product cost" when you amortize tech cost over billions of ad impressions - the "cost" really comes from "reduction in addressable market" - ie. what portion of the audience will stop watching the platform due to ads. At least for Google and Facebook, the answer seems to be negligible proportion and in China at least, publishers are finding that many of such people are willing to pay for an ad free experience if you have killer content.

Taxi service is a much more constrained business - you have to pay out product cost plus some incentive to generate supply but you have a strict price ceiling on scaled demand and a lot of competition. The answer for the previous generation of entrepreneurs in this space was to execute regulatory capture and institute a system of restricted supply to boost prices (ie. Medallions, permits etc). So it's going to be interesting to see how these businesses evolve.

Re: Uber opens at $42 per share

#456

Post by josh5555 »

pizzazzaro wrote: post #349
resters wrote: post #97

Earlier quoted context omitted.

The investment bank sells a lot of shares to its own preferred clients. If the price then drops (because the initial offering price was too high) those preferred clients lose money. So the bank has every incentive to price it low, and usually does. So when the market goes even lower, we know that the IPO was done out of desperation and that early investors who had influence over the IPO price were eager to dump some…

>If the price then drops (because the initial offering price was too high) those preferred clients lose money. Unless these preferred clients are active traders, this isnt a problem. Remember when government nixed fiduciary resposibility? Just slide a soon-to-drop, over-valued-at-IPO stock into say,... someones' retirement account? Wouldnt it be weird if a bunch or Morgan-Stanley-managed 401Ks were shifted to include…

I don't think you understand how 401ks work. First, Morgan Stanley probably doesn't manager people's 401k allocations, the employees must choose their investments. Second, most 401ks only allow mutual funds, not single stocks.

The fiduciary rule is not in effect but the suitability rule is. You can't give someone unsuitable investments or you face lawsuits and fines. IPOs are very restricted to who can participate.

There is a lot of naughty business in the financial industry, but the industry does serve a real and necessary purpose. Businesses need ways to raise capital, etc. Investors need a place to save money for retirement. It isn't all evil.

Re: Uber opens at $42 per share

#457

Post by wdb »

baq wrote: post #256
fooker wrote: post #179

Earlier quoted context omitted.

Uber has paying users. Facebook had advertisement targets. Doesn't make too much sense to conflate the two.

wait what? facebook had paying users AND advertisement targets AND an ability for the paying user to precisely target an ad at the product AND an extremely powerful incentive for the product to not move to competition (product's friend network). out of the above uber has only paying users - who are ready to jump ship to competition for a penny per mile.

Yeah, I use whatever is cheapest form taxi whether it is uber, viavan or the tube ;)

Re: Uber opens at $42 per share

#458

Post by dangjc »

Udik wrote: post #312
busymom0 wrote: post #304

There's way too many comments in this thread comparing Uber's non-profitability to Amazon's which I think is quite silly. Amazon lost $2.8 billion over its first 17 quarters while Uber lost $4.5 billion in 2017 alone. Also comparing Uber to Facebook is quite silly too. Facebook had a lot more users than Uber but they are also different types of users. One is a free user with hope for targeted advertisement (in which…

> Also comparing Uber to Facebook is quite silly too. Facebook had a lot more users than Uber but they are also different types of users. The main difference seems to me that Facebook enjoys a network effect: you can move to a different social network, but who will you find there? While you can download as many taxi service apps as you want and use one or the other, the one that has the cheapest offer. If an Uber com…

Uber pool gives it a very strong network effect. You need enough riders going in the same direction as you at the same time. When I do my morning commute, I can't take Lyft because there isn't a critical mass and there isn't room for two ride sharing networks. Uber is consistently cheaper and has shorter wait times.

Re: Uber opens at $42 per share

#459

Post by hakfoo »

jbigelow76 wrote: post #189
fooker wrote: post #179

Earlier quoted context omitted.

Uber has paying users. Facebook had advertisement targets. Doesn't make too much sense to conflate the two.

But you don't say directly which of the two is more desireable, the market unfortunately looks like it prefers advertising targets.

I think there's been a decade or more or irrational fixation on data-driven advertising at this point.

The market is convinced building these huge treasuries of consumer data, at any expense in cost and creepiness, will result in wildly better advertising performance. We've given Google and Facebook 12-digit valuations on that principle.

But advertising is a 80/80 problem: You can get to 80% of potential results easily, and spend 80% of your money, effort, and goodwill chasing the rest. Content-based ads (think the early era of Google AdSense when the ads would be text or fall back to PSAs) sell pretty well, considering you didn't need an exabyte of profile data to build them.

Eventually, fundamentals have to come into play-- these companies need the revenue numbers to justify the valuation-- and the only way to get there is to charge premium prices for their advertising services. At that point, the music stops, when advertisers realize the cost-per-acquisition is poor compared to much cheaper, more scattershot technology, or even just earlier stops on the targeting continuum.

Re: Uber opens at $42 per share

#460

Post by rswail »

throwaway082729 wrote: post #104
rtempaccount1 wrote: post #49

Earlier quoted context omitted.

My feeling though is that Amazon had a much larger moat to build, with distribution networks, warehouses, logistics etc. With Uber, what's their moat, so that when they raise prices to become profitable users don't just move away? Lyft/local taxi companies/public transport, all have the infrastructure to provide the service that uber provides.

Lyft has to be in business till then. Local taxi companies are more expensive than Uber and inconvenient. Public transport is barely used. Uber is providing a subsidized public service while employing a lot of people. The moat is there but the question is one of diversification and sustenance as a public company. In the coming days, there'll be a massive internal push to reduce costs, diversify and become profitable.…

Here in Melbourne Australia, Uber has caused the government to deregulate the car hire/taxi business. So the cost of entry for car hire is identical for an Uber driver or other limo/car hire services. It's the cost of the car, the cost of the driver, and the cost of access to bookings.

For street hail, the cost is higher because the government sets regulation about the equipment (eg compulsory CCTV, meters etc).

The net result is that the cost of an Uber ride is almost identical to a street hire, identical to using one of the other apps that are around (13 cabs, Ola etc).

Uber has a name/brand advantage, but it has lost the cost advantage over the old taxi model and it has lost the app advantage as the app is easily replaceable.

Many drivers operate on more than one app and street hail cabs (the "original" taxis) operate on both.

Uber's business model for their core business is unsustainable, the margins and operating costs are identical to other operators, there is no advantage of scale.

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