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Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

economist.com

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Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#91

Post by lhorie »

Zanfa wrote: post #84
lhorie wrote: post #61

Earlier quoted context omitted.

No, according to the latest report, rides have been profitable[0] (@ +544M in the last quarter). Deliveries are still in the red, but only barely (@ -12M, up from -183M from previous quarter). "Losses" largely come from G&A/R&D. [0] https://techcrunch.com/wp-content/uploads/2021/11/Screen-Sho...

That's just creative accounting. Uber actually incurred a $2B loss, but for some reason they insist on ignoring expenses when calculating their "profits".

The 2B "loss" was a downswing of Didi stock, which Uber has a big stake on; AFAIK Uber didn't actually liquidate that position, so it's more of a paper money loss. See [0]

As for "creative accounting", pretty much everyone in this industry segment uses EBITDA. That's the language investors and media use to talk about earnings calls for not just Uber, but also Lyft, Doordash, etc. If you want to make a case for why GAP analysis would make more sense vs EBITDA given the maturity of the industry, I suppose a more elaborated argument is in order?

[0] https://www.investopedia.com/terms/m/mark-to-market-losses.a...

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#92

Post by mmazing »

Ekaros wrote: post #82
mmazing wrote: post #79

Earlier quoted context omitted.

I still contend that many of these types of "startups" are merely elaborate ponzi schemes. Actually, I think a lot of businesses are just that.

They are not even ponzi schemes. They are blackholes, which if they are lucky are IPOed/sold to greater fools...

Right, but, the owners end up pocketing a substantial portion of investor money. Look at WeWork.

If you need 10 rounds of funding to keep running, your profit model is "obtain investor money".

(Probably controversial, but IMO 3 rounds of funding is pretty sus.)

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#93

Post by arcturus17 »

bennysomething wrote: post #46
roystonvassey wrote: post #38

If there was any time to be skeptical of Uber's longevity, it is now (at least for me). My experience is anecdotal but I visit my home country every year for a few months and I can clearly notice the declining quality of Uber's services: 1. Vehicles, on average, take at least 10-15 mins longer to get 2. Even if you find a vehicle, 60% of these rides are canceled (either by the driver because they call me and find out…

There's a shortage of drivers (in the UK at least) https://www.bbc.com/news/business-59158230 It's actually getting really noticeable. It used to be easy for me to hail a taxi or get an Uber from a pub, it's next to impossible now

I haven't read anything like that in Madrid, but I've been noticing it for a couple months now.

Rides in central neighborhoods such as Chamberí used to take 2-3min at most, now it's very common to see waits of 7-8min.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#94

Post by kmeisthax »

xoa wrote: post #19

A core aspect seems to come at the end as a tossed in aside but gets disappointingly little consideration: > Real business flywheels do exist. Software makers have managed to lock users in and thus generate gross margins typically above 70%. No, it's not just "lock in" it's the magic of minimal to zero marginal cost, near zero "stocking" cost, instantaneous reaction to demand, etc. Software and digital services firms…

One thing to note is that every piece of software is born with a government-granted monopoly (copyright title) around itself. This monopoly is strengthened by the fact that software has strong dependencies that don't exist for other kinds of creative works. You can't buy and run a Windows app without also buying and running Windows[0] - there really isn't an analogue to this in other forms of creative media. If you ran any other kind of business with the same level of monopolistic zeal as a software company does, you would almost certainly be in violation of antitrust law.

[0] Yes I know WINE exists. It doesn't really affect the argument here; the fact that it's legal to reimplement APIs merely puts upper bounds on the size of the software monopoly. And those bounds are really high - reimplementation is far more difficult than just, say, pirating Windows.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#95

Post by SonicScrub »

batshit_beaver wrote: post #28
mstipetic wrote: post #18

Earlier quoted context omitted.

And previous well functioning economies get destroyed in the process

If pervious economies were so well functioning, why couldn't I easily order pretty much any food from any restaurant within a 50 mile radius with a click of a button before Uber and DoorDash came along?

You absolutely could do that before. The average person just couldn't afford the prices until it became heavily subsidized by VC money.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#96

Post by OldHand2018 »

lostcolony wrote: post #52
bdcravens wrote: post #32

Earlier quoted context omitted.

Tesla is profitable. The profit is propped up a bit by subsidies, but it seems strange to include the company in a discussion about service providers that are battling in a war of attrition.

Tesla is profitable; so are some small mom and pop stores. The valuation isn't a boolean "isProfitable ? trillion dollars : worthless". Compare Tesla's revenues against other trillion dollar companies and it clearly seems overvalued. Here's Bloomberg's analysis - https://www.bloomberg.com/news/articles/2021-10-26/tesla-is-...

> However, Jonas said Morgan Stanley clients also noted the company’s larger addressable market, and an opportunity to dominate the internet-of-cars market as other possible factors built into its valuation.

Ah yes, the internet-of-cars market. It would be very wise and lucrative to dominate there.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#98

Post by mdoms »

coldcode wrote: post #23

All of these companies may have a functional business and can stick around, but they are not worth the valuation present in their stock. Even Tesla is not worth anywhere near $1T. In the end you have to eventually earn enough to support the price (once all the Fed support goes away from the market) but none of these companies will ever make enough revenue or profit. For now unreality keeps the market high.

Tesla will be propped up by the American taxpayers, as American automakers always have been.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#99

Post by savanaly »

bostonsre wrote: post #49
roystonvassey wrote: post #38

If there was any time to be skeptical of Uber's longevity, it is now (at least for me). My experience is anecdotal but I visit my home country every year for a few months and I can clearly notice the declining quality of Uber's services: 1. Vehicles, on average, take at least 10-15 mins longer to get 2. Even if you find a vehicle, 60% of these rides are canceled (either by the driver because they call me and find out…

Do they still lose money on every ride they give? I've been skeptical for a while now, it's a ponzi scheme.

For the last time, not everything that's not everything that's a bad financial proposition == ponzi scheme. At what point have new drivers ever paid the wages of old drivers?

Uber drivers have always done ok in the short term, new or old, it's Uber that loses money on every ride. And if the drivers are not coming out ahead long term due to maintenance costs, that's not affecting newer drivers any more than older drivers.

Re: Uber, DoorDash and similar firms can’t defy the laws of capitalism after all

#100

Post by mdoms »

bdcravens wrote: post #32
coldcode wrote: post #23

All of these companies may have a functional business and can stick around, but they are not worth the valuation present in their stock. Even Tesla is not worth anywhere near $1T. In the end you have to eventually earn enough to support the price (once all the Fed support goes away from the market) but none of these companies will ever make enough revenue or profit. For now unreality keeps the market high.

Tesla is profitable. The profit is propped up a bit by subsidies, but it seems strange to include the company in a discussion about service providers that are battling in a war of attrition.

You can be profitable and also wildly overvalued. If I invest $50 million for a 50% stake in my neighbour's kids' lemonade stand it's very unlikely to be a reasonable valuation regardless of their gross margin.
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