Uber Sinks to New Record Low as IPO Share Lockup Expires • Hacker News Board

Re: Uber Sinks to New Record Low as IPO Share Lockup Expires

#61

Post by JackFr » Wed, Nov 06, 2019, 4:14 PM UTC

pbreit wrote: post #23

xfour wrote: post #10

Earlier quoted context omitted.

What's their cash on hand position, I believe I saw that there's 13B, after adding 8B in the IPO, that seems like a ton of cash on hand for a business that isn't showing any signs of turning of profit. Could they not just without any further cash infusion continue to lose similar amounts for the next three years and be cash solvent. Does that then not give a big incentive to figure out how to become profitable in the…

The core business is very profitable. Loss-making is happening in their less mature product categories and expansion efforts.

And one of the benefits of an IPO is that the market discipline management to focus on being profitable (assuming they're not playing games with from multi-class voting shenanigans.) It's funny that this role of the market is often derided ("Management isn't thinking long term -- they'll do anything to make next quarters numbers...") but it's very important.

Re: Uber Sinks to New Record Low as IPO Share Lockup Expires

#62

Post by drannex » Wed, Nov 06, 2019, 4:14 PM UTC

deweller wrote: post #51

hodder wrote: post #35

Earlier quoted context omitted.

Sure, but the same could be said of Tesla. Horrible employer, constant exec churn, unbelievable cash burn, what appears to be structural losses.... But Tesla still has a 56B mcap today. Uber is 46B. These VC/equity issue cash furnaces can go on longer than most can fathom if a subset of investors believe in the long term vision.

Tesla has arguably a more clear path to a profitable future. Uber's path to profitability is arguably much more speculative and dependent on risky technology advances.

Agreed. Not only did Tesla have a clear path, but they had a product that could sell at much higher margins, better quality control, not-so dubious legal ways of selling them, paid their employees decent wages (Uber... does not), and they won't have technology that can be copied and repeated by a second year student at uni.

Uber and Tesla are not anywhere close to directly comparable.

Re: Uber Sinks to New Record Low as IPO Share Lockup Expires

#63

Post by hluska » Wed, Nov 06, 2019, 4:14 PM UTC

ProAm wrote: post #15

Is anyone really surprised? Years before the IPO we knew they were not profitable in the least. We knew VC cash was subsidizing rides. We knew that their future was purely dependent on a self-driving car fleet where they could ditch drivers (and their pay) completely. This on top of a horrible culture with pretty lousy ethics and morality. This is how this was supposed to play out and everyone here (on HN) knew that.…

This will sound very naive (because it is), but I thought that the free market would see through the bullshit and value them appropriately. That is happening, just far more slowly than I imagined.

Re: Uber Sinks to New Record Low as IPO Share Lockup Expires

#64

Post by tempsy » Wed, Nov 06, 2019, 4:14 PM UTC

joshe wrote: post #57

a

Uber moved from stock options to RSUs in December 2014. People who got RSUs are OK. Those that got options in late 2014 are probably the worst off but unsure what the strike price was for those.

Re: Uber Sinks to New Record Low as IPO Share Lockup Expires

#65

Post by aplummer » Wed, Nov 06, 2019, 4:15 PM UTC

deweller wrote: post #51

hodder wrote: post #35

Earlier quoted context omitted.

Sure, but the same could be said of Tesla. Horrible employer, constant exec churn, unbelievable cash burn, what appears to be structural losses.... But Tesla still has a 56B mcap today. Uber is 46B. These VC/equity issue cash furnaces can go on longer than most can fathom if a subset of investors believe in the long term vision.

Tesla has arguably a more clear path to a profitable future. Uber's path to profitability is arguably much more speculative and dependent on risky technology advances.

I think very clearly, I’m not a Tesla fan but the solar roof and car are both unique and the core fan base is very strong.

Re: Uber Sinks to New Record Low as IPO Share Lockup Expires

#66

Post by omarhaneef » Wed, Nov 06, 2019, 4:16 PM UTC

streetcat1 wrote: post #46

omarhaneef wrote: post #19

So I think people may be misinterpreting this drop: lock up expired today, so the sales today -- throughout the day -- are a result of the lock up expiry. This pre-market drop is the result of people anticipating the drop and selling before the market opens. It is also, partly, driven by the disappointing earnings from 3 days ago, and indeed the drops over the last few days have been about as large. For what its wort…

The post lockup sale was already "priced" into the share price a month ago (or even before). The market react only to NEW information. In general, it is impossible to know what is priced in or not.

By your logic, it should have been priced in at IPO, since we knew back then that it would happen.

However, note that back then we also didn't know what else was going to happen. We didn't know if earnings would go up or down, or a lawsuit would emerge etc.

After earnings (a few days ago), we had a "purer" expression of the effect of the lockup expiry.

In other words, we had the information but there was also a lot of noise at IPO (or a month ago etc).

Re: Uber Sinks to New Record Low as IPO Share Lockup Expires

#67

Post by semiotagonal » Wed, Nov 06, 2019, 4:16 PM UTC

streetcat1 wrote: post #46

omarhaneef wrote: post #19

So I think people may be misinterpreting this drop: lock up expired today, so the sales today -- throughout the day -- are a result of the lock up expiry. This pre-market drop is the result of people anticipating the drop and selling before the market opens. It is also, partly, driven by the disappointing earnings from 3 days ago, and indeed the drops over the last few days have been about as large. For what its wort…

The post lockup sale was already "priced" into the share price a month ago (or even before). The market react only to NEW information. In general, it is impossible to know what is priced in or not.

I reckon that's generally true, but I'm trying to think through if it applies when composition of "the market" changes, e.g. when people that couldn't participate before (in lockup period) can participate now.

Is it still the case?

Re: Uber Sinks to New Record Low as IPO Share Lockup Expires

#68

Post by naravara » Wed, Nov 06, 2019, 4:16 PM UTC

ProAm wrote: post #15

Is anyone really surprised? Years before the IPO we knew they were not profitable in the least. We knew VC cash was subsidizing rides. We knew that their future was purely dependent on a self-driving car fleet where they could ditch drivers (and their pay) completely. This on top of a horrible culture with pretty lousy ethics and morality. This is how this was supposed to play out and everyone here (on HN) knew that.…

>We knew that their future was purely dependent on a self-driving car fleet where they could ditch drivers (and their pay) completely.

Nah. Right now their business model relies on having their labor bring their own capital. I've always seriously doubted that cutting the labor out of the equation and replacing it with capital that Uber now has to furnish and maintain was going to save all THAT much money.

The numbers are all over the place, but from what I've been told once you factor in mileage costs, gas, and maintenance + cleaning of the vehicles most rideshare drivers are only earning somewhere from $1.50 to $3.00 an hour. If Uber then has to internalize all those costs plus add all the software maintenance/development costs of their self-driving AI how much is that saving them really? Is it going to be enough to defray the billion and a half dollars they're bleeding every year?

No, their long-term game was always going to be to undermine public transit and personal vehicle ownership through an artificially cheap business model and then once their monopoly (or oligopoly with Lyft) is firmly entrenched to boondoggle municipal governments into subsidizing rides for them instead of spending money on building out transit.

Re: Uber Sinks to New Record Low as IPO Share Lockup Expires

#69

Post by john_moscow » Wed, Nov 06, 2019, 4:16 PM UTC

hodder wrote: post #35

ProAm wrote: post #15

Is anyone really surprised? Years before the IPO we knew they were not profitable in the least. We knew VC cash was subsidizing rides. We knew that their future was purely dependent on a self-driving car fleet where they could ditch drivers (and their pay) completely. This on top of a horrible culture with pretty lousy ethics and morality. This is how this was supposed to play out and everyone here (on HN) knew that.…

Sure, but the same could be said of Tesla. Horrible employer, constant exec churn, unbelievable cash burn, what appears to be structural losses.... But Tesla still has a 56B mcap today. Uber is 46B. These VC/equity issue cash furnaces can go on longer than most can fathom if a subset of investors believe in the long term vision.

Tesla is toxic because the founder has a vision, sets tight constraints and pushes hard on people to meet them (hello Amazon). Uber is toxic because there are too many people sitting on a pile of investor money, hence politics and infighting. As an employee, you may want to avoid both, but as an investor, you need to see the difference.

Re: Uber Sinks to New Record Low as IPO Share Lockup Expires

#70

Post by habosa » Wed, Nov 06, 2019, 4:18 PM UTC

I always look for a discussion of "how much money does Uber need to make to cover all the fundraising" and I never see anyone doing that analysis. Instead it's just "they're not profitable" or "they turned a profit".

Uber took a few billion dollars of investor capital over the last decade. Let's assume we live in the world from the textbooks where the value of Ubers stock is actually the net present value of all its future earnings (hah!). What do those earnings need to look like for the investors to turn out to be right? As in, would they have done better investing in some other asset?

My theory for why you never see this kind of analysis is that it doesn't matter to anyone. Nobody is trying to actually build a business that will generate money with their investment. They're building hype machines they can use to sell their stake to someone else before it all explodes. It's speculation and manipulation all the way down.