Uber S-1
sec.gov
sec.gov
And yet Grab and Didi drove Uber out of South East Asia and China, Ola is giving Uber a run for its money in India and now GoJek in turn is challenging Grab. In my recent trip to Tokyo we were mostly advised to take regular cabs Vs Uber in contrast to a year ago. That's literally half the world where they're getting out competed.
When reasoning doesn't line up with facts, there are usually flaws in the logic. One possible flaw it turns out is that well off globe trotters or even people who frequently travel across cities in a country and would love to use the same app everywhere likely form a small % of total cab trips. Majority of trips are just local trips by an area's residents. So locally, majority just goes with whoever offers better service and relevance. Cutting Price can trump over these but by going public, bottom line became a lot more important to Uber and Lyft - so this isn't likely a viable strategy. Another possible flaw is that the compute required to support this is likely commoditized and there's not likely as much competitive advantage in data.
So it's going to be interesting...
I don't think there's an opposition of facts and logic here. Grab was founded in 2012 (https://www.grab.com/sg/about/), Ola in 2011 (https://www.olacabs.com/about.html), and GoJek in 2010 (https://en.wikipedia.org/wiki/Go-Jek). All of these were entrenched players in their respective markets when Uber decided to put up a fight. Uber gave the Grab and Ola's VCs no option but to double down, if they were to save their existing investments. In this race to bottom, it was Uber who blinked first. Losing SE Asia was not an existential threat to Uber, but definitely for Grab. Media likes to talk winners and losers, but Uber did end up taking 27.5% stake in Grab just to leave the market (https://techcrunch.com/2018/04/24/grab-uber-deal-southeast-a...). However, their fight in India with Ola continues. But to my initial argument - back in 2010-2012, we thought that the network effect of social networks (like Facebook) extended to ride-sharing services too creating high barriers to entry. We know now that isn't the case. Imagine how a VC would react today to a startup founder pitching a ride-sharing idea in a market where Uber/Lyft are already entrenched, given what we have learned from Lyft IPO and Uber's SEC filing. My argument may seem counterintuitive here, but I believe that the Uber/Lyft's revealed financials is what may ultimately save them. They have successfully managed to make the ride-sharing market unattractive (at least for 10x return seeking VCs).
I'd go back to late 2000s when Nokia's and Blackberry's stranglehold on high end phone market seemed unassailable but how it was blown away in the preceding years by a more expensive product (better app store for developers, better device for the end user).
There is no way to differentiate in this market. The only thing that would make me switch is a guarantee of a good driver, but that would just raise the costs absurdly.
Even if you succeed temporarily, your competitor will clone you and your technology. Its similar in USA but in China its multiplied by the population factor in a region the same area so its more intense.
The competition also permeates downwards and creates beasts like the 996.
Actually, the success of Didi,Grab,Ola etc. vs. Uber proves that in the complex e-business, as long as there is enough market space in the local area, and you can organize a good team, you can win in the competition with foreign companies. Just like Alibaba and JD beat Amazon, Meituan beat Goupon in China.
That's BS. Yandex is an incredibly strong player in Russia in the search space and Google is not outcompeting them either. It was the case way before Putin's political ambitions became relevant.
All in all, there are many reasons to blame Russia for it's government, but that's blatantly not one of them.
They have a deeply inferior product, fail to catch up to Grab's breakneck innovation pace.
Also, being an Indonesian company, Go-Jek has a disorganized company culture that is not conducive to competing with a lean, well-oiled machine run by Singaporeans like Grab.
I also don't think being an Indonesian company has challenged Go-Jek in any way. Traveloka, Tiket.com, and Go-Jek are one of the most prominent businesses in Indonesia, and they all look like well-oiled machines.
Grabs two co-founders were born in Malaysia and the execs are from all over the world.
Both are very successful companies but from the innovation perspective Gojek is most definitely the leader. You need only look at their offering (dozens of products built in house) in comparison to everyone else outside of china. Their food business is now bigger than the ride sharing for example, and their rollout of this was exceptional. Light-years ahead strategy wise of the rest at the time (grab/uber).
The only thing I can think of that Grab has executed on better is international expansion and the initial grab-car service was at one stage far more popular than go-car.
UPDATE: Got it, self driving cars. I am not deleting the comment in case others were confused as well.
My personal guess is that "soon" for fully autonomous cars is not any reasonable definition of soon. Even if you accept the tech is close to okay in Arizona (I wouldn't), think about the weather and driving conditions in most of the worlds' markets for these global companies.
I was still thinking about it during my bike ride later in the day, and I noticed that more than a dozen times I exchanged looks and nods with drivers to ensure they had seen me and that it was safe to do something.
No self driving car is able to look a human in the eyes and determine their likely course of action. And it most certainly won't be able to signal to the human a message as complex as "I have understood your intentions".
What's more unrealistic to think is that a move to driverless cars / less car ownership would lead to the manufacturer's rolling over.
So how do we already have Lyft, Cabify, MyTaxi, Bolt, Kapten, Didi, AutoNavi, Meituan, Grab, OlaCabs, and a bunch more?
That aside, yeah, Uber has a negative moat; I don't see why the car drivers themselves couldn't band together to make a competing app if the mother company started to take a real cut.
[0] https://en.wikipedia.org/wiki/Airbnb [1] https://en.wikipedia.org/wiki/JPMorgan_Chase
But the business cycle goes up, and the business cycle goes down. (I mean, the general trend is upwards, but if you don't think there will be big downturns inbetween, well...)
The problem is that yes, uber and lyft have dominance for as long as they are willing to run the business for less money than anyone else; This puts a pretty hard cap on how profitable they can be.
(I mean, for an example of a competitor who might be willing to do it for very little over break-even, I've talked with several people who would be interested in setting up a competitor that was operated as a driver's cooperative. I mean, even that isn't workable when uber and lift are losing money, but it would work at profit levels that uber and lyft would consider break-even; such a cooperative could work really well as a break-even business, while investors in both uber and lyft would be super disappointed with a break-even business)
Compounding this, the ridesharing space is one that is massively price sensitive. Uber and lyft are so cheap that I've gotten rid of my car, and I use them all the time.
But if they raise their rates significantly? I'm gonna go buy a honda and drive myself; They get to duke it out for driving me around when I'm drunk, but we're talking less than 5% of my rides.
I suspect I'm not super unusual in this regard.
But usually? I switch from uber to lyft on my daily commute based on saving a few bucks almost every day. (right now, Lyft has some scheme where you can buy a 30-pack of $15 off coupons for $300. But they're used every time you ride lyft, so if you want to go somewhere for less than $15, you use Uber)
I mean, 90+% of my rides are areas I ride in a lot, where it would be worth my time to put a fair bit of effort into discovery.
I think that on the driver side, there's a lot of drivers with very strong locational preferences, too; If you are in SF and try to get a ride to San Jose, my experience is that 3 out of 4 uber drivers will kick you out of the car when they find out, so I think you might be able to recruit drivers that way, too.
And fight they have, because they don't have a moat. A moat is a competitive advantage that is _cost_effective_ to defend. Uber/Lyft don't have that.
They titillated investors with tales about autonomous vehicles leading to skyrocketing profits. But now the hype over autonomous vehicles has faded, and it seems unlikely that fully autonomous cars will be mainstream any time soon.
$100B+ for unprofitable ride shares and lukewarm burrito delivery? If you say so.
It just doesn't seem to prove much beyond "subsidized pricing is popular".
The personal mobility, meal delivery, and logistics industries are highly competitive, with well-established and low-cost alternatives that have been available for decades, low barriers to entry, low switching costs, and well-capitalized competitors in nearly every major geographic region. If we are unable to compete effectively in these industries, our business and financial prospects would be adversely impacted.
Taxis only make sense in the very small perecent of the US where you can walk outside and hail one coming down the street.
If they are willing to let their ridership fall to just above cab ridership numbers? sure.
That's the biggest problem with the market; demand is elastic. Uber's major competitor for my transportation dollars isn't lyft; it's me going out and buying a honda and driving myself. If they charged taxi prices, I'd buy a honda, and I'd use the rideshare less than 5% of the time I use it now.
That's the multi billion $ question, if they hike prices to become profitable, will customers swallow it, or jump to local alternatives. My feeling is the latter, I don't think you get economy of scale for running a taxi business, because your biggest cost is paying local drivers.
- Expected to be teh largest IPO this year in the US.
- 10th largest all time
- trying to raise around $10B
- 2018 Year Ended Revenue $11.27 billion
- 2018 Year Ended Net Income $997 million
- 2017 Year End lost $4.03 billion.
- 10 billion trips in September 2018, up from 5 billion in September 2017
- Gross Bookings From Ridesharing $41.5 billion in 2018
- Revenue From Ridesharing Products $9.2 Billion in 2018
- List under UBER, good ticker!!
- 29 banks listed as underwriting the IPO, for those of you wondering, yes that is alot. Like 20+ more than a typical IPO.
From Bloomberg:
- 2018, Uber's operating loss totaled $3.03 billion, however it technically turned a profit in 2018, generating $997 million in net income. That's thanks to a $5 billion "other income" benefit.
Other Income is defined as:
- Interest income, which consists primarily of interest earned on our cash and cash equivalents and restricted cash and cash equivalents.
- Gain on divestitures, which consists of gain on sale of divested operations.
- Unrealized gain on investments, which consists primarily of gains from fair value adjustments relating to our investments such as our investment in Didi.
- Foreign currency exchange gains (losses), net, which consist primarily of remeasurement of transactions and monetary assets and liabilities denominated in currencies other than the functional currency at the end of the period.
- Change in fair value of embedded derivatives, which consists primarily of gains and losses on embedded derivatives related to our Convertible Notes.
- Other, which consists primarily of changes in the fair value of warrants and income from forfeitures of warrants.
- Lyft now at $61/share, ouch, there just is no other way to put it. THey pulled a lot of financial engineering tricks to boost their IPO price and well the results speak for themselves:(
Biggest Surprise to me:
- Uber Eats comes in at $165 million for Q4, for comparison Ride sharing generated a total of $2.5B in net revenue, the rest being ride sharing.
- So Uber is not really all that diversified in terms of ride sharing vs other, they are essentially Lyft in more markets.
I don't understand why this is seen as a negative. An IPO is a share issuance — the higher the price per share, the more money they receive in exchange for the same percentage of the company. Post-IPO "pops" represent money left on the table, effectively a transfer to the high-dollar investors with connections to the underwriter who can buy at the issue price.
Any sort of financial engineering tricks that goose the accounting numbers without affecting the long-term health of the business are basically a transfer payment from people who buy in at the inflated price to entities who sell at the inflated price. It's rational for the company to try to pull them; it's also rational for prospective shareholders to refuse to take the other side of the trade (at least until the price corrects to the point where the true fundamentals make it worth it). In today's markets, you can always find someone irrational.
Aren't there issues with follow-on offerings? By taking the entire IPO pot for itself, the company will probably struggle to find investors if/when it needs to come back to the capital markets--which seems like an eventuality with Lyft.
Which in turn is and for the company since the new co-owners (shareholders) don't want to lose money but push the executives to "do something" (while in reality even combined most of the new shareholders don't have much voting power
In general the big Pops only help the banks and their top investors.
regarding other income: > Gain on divestitures increased by $3.2 billion from 2017 to 2018. This increase was due to gains on the divestitures of our Russia/CIS and Southeast Asia operations.
Covered on page 85, basically spinoffs with other regional leaders
The Q4 numbers I see:
Uber Eats: $165 million Grub Hub: $205 million*
* https://investors.grubhub.com/investors/press-releases/press...
- The whole calculation around "Other Income" are nothing short of financial engineering to show bottom line profitability.
- 24% of Uber's gross bookings come from 5 cities - Los Angeles, New York City, and the San Francisco Bay Area in the United States; London in the United Kingdom; and São Paulo in Brazil
- 15% rides started or were completed at an airport.
Seems they priced it perfectly, extracted maximum value for their investors and left nothing to gain for the public.
You make it sound like they had 10 billion trips in that month alone. It is 10 billion by September 2018
It's basically a 4B loss for 2018. The numbers all around are just unreal.
Could you elaborate? Interested in knowing more
https://webcache.googleusercontent.com/search?q=cache:https:... [gcache]
I challenge the fundamental premise that SDCs will make them profitable. There is no stickiness to their business model. Moving on to another ride sharing service is frictionless today. Most people I know use both Lyft and Uber. So if tomorrow SDCs become popular and offer a cheaper rate, people will move to them in droves. Nothing stopping them. We know Uber and Lyft are way behind on SDCs compared to Google on that front. It also looks like GM and Ford could there before these two. So what makes them a good investment either in the short or long term?
After the IPO I'd give it a year before the investors starts to demand slashing drivers pay, and cancelling the self driving car project.
I doubt this is true, at least not across their primary stock market index funds. For example, VTSAX only holds about 3500 stocks [0].
I don't know how the fund usually treats new, large IPOs, but I highly doubt that they would just blindly buy it at "any price"
EDIT: I just checked the holdings of VTSAX [1] and VGT [2], neither holds Lyft.
[0] - https://investor.vanguard.com/mutual-funds/profile/portfolio...
[1] - https://investor.vanguard.com/mutual-funds/profile/overview/...
[2] - https://investor.vanguard.com/etf/profile/portfolio/VGT/port...
Yes, Vanguard will buy at "any price" and will buy more at a higher price -- the funds try to replicate the breakdown of the underlying indices on a market cap basis.
There's even a known arbitrage opportunity with things like S&P500. When the S&P committee decides to include a new stock (and delist some other stock) you can front-run the purchases by the giants like SPY or VOO, slightly inflating the stock's value just when the ETFs buy it from you.
This means complex matching, pricing and routing algorithms that have been developed for almost a decade. It's also about working with regulations at the city level and building a reliable labor force of contractors to supply the marketplace in every new city before the launch date.
There is so many experiments and tweaks to ensure that both supply and demand side remain properly incentivized, not to mentioned fighting deeply entrenched Taxi companies from city to city, that I'm surprised Uber and Lyft have gone to IPO so quickly, other than for cash raising.
Of course, Uber and Lyft right now ARE so big because of all the advantages you mention, but a lot of that is still due to boatloads of VC money that allow them to operate unprofitably.
In the end, I think the ride-sharing business will look a lot like the airlines: lots of people traveling, but not a particularly great business.
A thousand local or regional competitors are just as much an existential threat to Uber as one or two big ones.
Doesn't that strengthen the argument for the network effect? The only places there have been successful 3rd party launches are in markets without Uber or Lyft, where there is no network effect to compete against.
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)
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.
We have incurred significant losses since inception, including in the United States and other major markets. We expect our operating expenses to increase significantly in the foreseeable future, and we may not achieve profitability.
Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.
If we are unable to attract or maintain a critical mass of Drivers, consumers, restaurants, shippers, and carriers, whether as a result of competition or other factors, our platform will become less appealing to platform users.
We may fail to develop and successfully commercialize autonomous vehicle technologies and expect that our competitors will develop such technologies before us, and such technologies may fail to perform as expected, or may be inferior to those developed by our competitors.
I wouldn't be surprised if after their first earnings release, Lyft stock goes below 40 USD.
Both of these stock valuations are being pumped and dumped onto public markets with clever tricks. Funny thing is, many of us won't even realize that some of our money will be invested in these stocks without our knowledge(ETFs/Funds tracking indices). Most 401ks market tracking Funds/ETFs will pick up these horrible stocks in time.
Tech wizards of silicon valley have managed to one-up wall street this time, by creating a 100B taxi app. With the 10B they raise from IPO, they will try more desperate measures to try and close the gap in price($100B-$120B) and value($25B-$35B).
I honestly don't like either. But a plain analysis makes Uber more attractive by far.
Logistics: conveying goods;
Mobility: conveying people;
Uber is both and more. Those sectors are too small for their ambitions -- essentially they think they are in the transportation business which encompasses logistics, mobility and more.
Surely you'll have heard of Uber Elevate [0] which is a flying taxi service to augment urban mobility and of course there is Uber Freight [1], a haulage business that was supposed to benefit from their Otto acquisition, which built self-driving trucks.
Most people investing in Mutual Funds and ETFs aren't getting exposure to SNAP. That may be the case with LYFT and Uber as well.
https://www.recode.net/2019/4/11/18302102/ipo-voting-multi-d...
If UBER gets into indices, that would be scamming hard earned 401k dollars of unsuspecting ordinary folks. Sigh... More hate for Silicon Valley when folks figure out
FYI I'm not even sure if what I'm saying even makes any sense or is realistic to do.
--- Warren Buffett
All of these revenue models are something that is pretty obvious how you make money at. And all of them are very different than crowd-sourcing rides for which it is not clear that the market prices is higher than the cost of providing the ride.
[1] https://www.fool.com/investing/2017/08/28/how-expedia-makes-...
Expedia comes a distant second Booking Holdings. https://finance.yahoo.com/quotes/EXPE,BKNG/view/v1
So while he may have done well, he didn't do as well as the competition.
They're upfront about it at the least.
"We have previously received a high degree of negative media coverage around the world, which has adversely affected our brand and reputation and fueled distrust of our company. In 2017, the #DeleteUber campaign prompted hundreds of thousands of consumers to stop using our platform within days. Subsequently, our reputation was further harmed when an employee published a blog post alleging, among other things, that we had a toxic culture and that certain sexual harassment and discriminatory practices occurred in our workplace. Shortly thereafter, we had a number of highly publicized events and allegations, including investigations related to a software tool allegedly designed to evade and deceive authorities, a high-profile lawsuit filed against us by Waymo, and our disclosure of a data security breach."
> Maintaining and enhancing our brand and reputation is critical to our business prospects. We have previously received significant media coverage and negative publicity, particularly in 2017, regarding our brand and reputation, and failure to rehabilitate our brand and reputation will cause our business to suffer.
In detail, they state:
> Our brand and reputation might also be harmed by events outside of our control. For example, we faced negative press related to suicides of taxi drivers in New York City reportedly related to the impact of ridesharing on the taxi cab industry.
Yikes, I never heard about that until reading it now. I could totally see how some people may have placed the bulk of their money into a NYC Taxi medallion, which have more than halved in value since 2015. https://qph.fs.quoracdn.net/main-qimg-a9d6f8a78e9c6e899cd886...
We have incurred significant losses since inception. We incurred operating losses of $4.0 billion and $3.0 billion in the years ended December 31, 2017 and 2018, and as of December 31, 2018, we had an accumulated deficit of $7.9 billion.
Revenue: $11.2BB (2018) $7.9BB (2017) $3.8BB (2016)
Growth: 3.3BB 4.1
NetInc: 1.0BB -4.0 -0.3
Other: $4.99BB (2018) -0.02BB (2017) $0.14BB (2016)
[0]: Includes gain on divestiture of $3,214BB, plus unrealized gain on investments of $1,996BB.
(edit, format)
They better focus on getting their original business in shape(call a cab via an app). I would be curious to know if they tried to raise prices in any markets and what the results were. I'm sure they want to know this for themselves and their investors thus far. Has anyone seen data/insights into such experiments by Uber/Lyft/Ola/X/Y/Z?
Given that none of the ride-sharing companies are sharing insights on such experiments, I am going to conservatively assume that these companies have low/no confidence that they can raise prices. Network effects make a good moat. But demand elasticity, substitute products, and competition seem to be dominating over the network effects.
Their original business is a good one. Price and value are way out of sync. UBER at $100-120B is way overvalued. Not touching UBER/LYFT stocks with a long pole at these valuations. Overpriced by 3-4x in my view. When they fall by 70-80%, will buy some.
- The time estimations are way off
- The app doesn't know one-way roads well, although they should have a lot of training data on the routes I go on
- They allow drivers haggling for the price by forcing users to pay with cash instead of credit card.
- The app doesn't know about the road tarifs sometimes, and the driver is not allowed to ask that money from me, which makes an awkward situation
- Sometimes I'm getting 30 year old cars, which the Taxi companies filter for
I would happily pay more than the current price, but I need more reliable service, which the software could provide. Right now Taxis with all their problems are still competition.
The other issues you mentioned seem to be tech related in that as companies that offer navigation services improve their data and services in South America the experience there should markedly improve.
You know they did, and if the results were good they would have done it across the board.
1. Humans aren't gonna trust SDCs easily. The way I look at it, SDCs would be used only to transport freight for a few years before people can trust it enough for ride sharing. I personally believe that companies should focus on self-driving trucking rather than self-driving cars and pivot into ride sharing after a few years of successful freight transport. People would trust the leader in the self-driving truck industry more than a top-notch but unproven tech company. Let alone cars, as simple as elevators in the buildings were operated by actual people before becoming completely autonomous.
2. Uber is not just in the USA. SDCs aren't gonna be approved everywhere, even after it becomes legal in the USA. Uber still has access to that market, but Waymo magically can't.
3. Uber has other verticals too (Uber Eats).
Really? I work in the SDC industry and I have the opposite opinion. Unless the self-driving trucks are all driving on dedicated roads (which won't happen) I would not want to share the road with them while they 'experiment'. IMO, the greatest threat is not to the occupants of the SDC but to the other vehicles, pedestrians, and bicyclists.
This just highlights the need for better public transportation from cities to their airports.
Is loaning 20 million dollars to employees for personal use as dodgy as it sounds?
Revenue
2016: $3.8bn
2017: $7.9bn
2018: $11.27bn
Trips
2016: 1.8bn
2017: 3.7bn
2018: 5.2bn
The internet is such a game-changer.
We don’t know what the numbers look like until Uber either raises their prices or cuts their expenses to be viable long term.
Or subsidizing artificially cheap rides is a game-changer.
Yes but also portable, low-cost GPS enabled internet connected devices are a game-changer. I don't see how Uber or Lyft could exist prior to the iPhone pushing adoption of GPS.
IPOs are making BTC look good.
I don't actually like Uber that much as a brand, and I understand that the HN groupthink is against them, but I'm not clear on why everyone seems think this is such a terrible business. Are people really going to go back to taking cabs?
I predict that Uber and Lyft will both see big drops in stock price, especially as we enter the next recession. If one or both of the companies survive the downturn, they will turn into leaner, healthy bluechip stocks that turn a stable profit, at least until the flying, self-driving, solar-powered scooters take over. IMHO anyway.
Q1 Q2 Q3 Q4
2017 -8% -0% -3% 9%
2018 18% 15% 9% -3%
Their problem is that if they rack up prices/commission to pay off their investors, then both their drivers and riders will simply switch to the next pre-IPO company that will connect them for less.
Uber in my mind is like all the other social media sites. We appreciate that they're the best thing to connect us at this time - but if something better comes along, both sides have no loyalty and will move on.
Can anybody imagine an Uber provider/rider they've met paying over the odds for an identical service because "they love the Uber brand"?
Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.
The restrictions are enough of a pain (especially the disclosure requirements since most companies would prefer their competitors not knowing their financial state) that it isn't uncommon to see a private company put off an IPO for a super long time.
My guess is that $10M/yr in revenue is close to enough to IPO. It's just not popular recently.
1. Due to recent regulations (introduced after the 2000 dot-com crash), the fixed cost of going IPO (SOX compliance, putting internal controls in place, audits etc) have significantly gone up.
2. The additional scrutiny and public visibility that comes from going public is a drag on management bandwidth, employee morale and attention.
3. Private money is now plentiful and cheap, so it might actually be cheaper just to take private investors than public.
4. Public markets prefer stable, predictable companies with a known well understood strategy. Consider how often Tesla is in the public eye and how they might have benefited from staying private longer given their unpredictable business and strategy.
More relevantly, because of vesting cliffs it likely makes roughly no difference, except you get to see a bunch of colleagues celebrating becoming more wealthy.
actual millionaires not paper millionaires :).
> but will hopefully blow up
why do you wish others to fail so bad?
Or do you not expect the car to detect puke and/or a passed-out passenger? Seems like a trivial problem compared to all the recognition software that would be needed for self-driving.
Will they be doing a road show next or is this something that they would have already done prior to the filing?
I don't think Uber, specifically, had anything to do with Khashoggi murders (with regards to the coverup).
https://www.cnbc.com/2017/10/23/saudi-prince-alwaleed-bin-ta...
Gain on divestiture 3,214
Unrealized gain on investments 1,996
If this was pure cash going into their bank account, does it mean they ran out of cash in 2018? Their working capital was 4,900 billion at the end of 2018.
Whats that mean again?
and people in here also dont seem to appreciate that uber can change their prices. they cant right now, but they will be able to soon. all the investor money floating around means that their competition may be able to operate in the red for extended periods of time. when the investor money dries up and everyone is surviving on profit, prices can go up. and they will go up because rideshare is the most efficient and cheapest way to do taxis -- nobody is going to come in and disrupt uber. except for driverless cars. but driverless cars arent going to happen. not anytime soon.
edit: i just looked at the chart in the document and as far as i can tell they are 3B in the red. not really sure what the units are in that chart. ok, well there are a lot of expenses where i cant tell exactly what they are, but their marketing expenses were 3B. 3 fucking billion dollars -- am i reading that correctl? thats the same amount by which they are in the red. i also see some very high numbers for management. all uber has to do is cut the fat and they will be making a nice profit.
This company seems to be run like a mafia ring compared to lyft. https://en.wikipedia.org/wiki/Uber#Criticism
Other income (expense), net: 139, (16), 4,993
Can someone explain what that is? Will it re-occur in the coming years?
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
- 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 will be able to improve its services so when someone else does launch their service will be inferior.
4. Uber expects that its users will stick to it over the course of years in the face of significantly cheaper competition.
5. Uber expects that it is going to be able to continue to use human drivers even while it competes against those same people with its SDC's (i.e. when your employer hires your replacement but expects you to train them).
I simply can't imagine how Uber is worth anything at the moment.
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 to build that network, and it will take tremendous capital expenditure to neutralize it.
It remains to be seen if Uber can make an economic profit, but with an operating loss of just 10% of gross revenue, it's not at all inconceivable.
Does it, though? Every driver I've talked to basically drives for "all of them". Several told me they try to find whatever apps are local for driving and they setup those alone with Uber and Lyft and simply take whatever pays the most / is more frequent.
Uber's software and network are solid but I don't think there is a whole lot of loyalty there. Anyone who can drive a wedge into a spot in their business could slowly erode it, IMO.
Now, they're too big to die quickly or anything like that. But it doesn't seem impossible at all to me.
Uber has a shallow moat around an ugly castle.
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 and VCs, who wouldn’t love to wake up tomorrow morning and read about all the uber drivers organizing, launching their own platform and getting equity?
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).
It doesn't take tremendous concentrated capital, though. A bunch of independent regional competitors can fight for each city / country separately. Uber has a leg-up with short-term tourists, who already have their app installed, but for regular users, anyone with a decent app and some ad money can be a competitor.
If Waymo don’t make much of a dent in Uber’s market share in 3 years, Uber gets their SDC tech to market and problem solved. If they DO start making a big dent, Uber can likely raise enough money to simply drop prices to Waymo levels (with human drivers), and just bleed cash until they get the tech out to be profitable. Uber (and their investors) are well versed in this strategy.
Prior to this week, Uber had a consecutive ride bonus for 3-rides in a row that would add $7 to 11. But the app would malfunction often or not alert you, and break the streak. Almost everyday I complained but Uber never conceded and never gave me the small bonus.
This week, the consecutive ride bonuses are gone. Replaced by a flat $185 bonus for 70 rides in 7-days to $305 for 120 rides. Previously the biggest ride bonuses would require you to drive 11 hours a day consecutively to hit. And if you did 25% or 50% you’d get 10-15% of the bonus.
My current rate is $23/hour minus roughly $5-6 for gas, depreciation, car and insurance. My rent in LA is $3000/month.
Perhaps $17-18 an hour is fair but Uber’s tactics seem incredibly malicious and ever-changing. I feel like they are exploiting drivers unnecessarily although it is nice to have income whenever I need it.
There’s also tons of bad drivers, they encourage you to use the Uber map system which is seriously flawed, doesn’t calculate traffic and is semi-dangerous. They don’t advise drivers how to do basic tips to navigate traffic.
It could be so much better but it’s weird corporate strategies mixed with bad execution. The negatively Uber generates is a serious problem for their brand and I can’t imagine they’ll exist in 10-years based on how they decide things.
Also uber could become profitable if they charged more. I've actually started taking taxi's again, since they are marginally more expensive than Ubers/Lyfts. However, if you pick them up from an airport, you don't have to wait staring at your phone for 5 minutes watching your driver just sit around in their car until they start moving.
They have $40B in gross rideshare bookings and $3B in real losses for 2018.
Let's assume 20% of their costs are fixed and 80% are variable.
What might happen if they raise prices by 10%?
Gross bookings drop by 20% / Revenue per booking increase by 10% => $35.2B in gross bookings
Variable costs drop by 30% (due to lower driver acquisition costs since they're oversupplied) => $24B in variable costs
Fixed costs stay the same => $8.6B
That nets $2.6B profit. My numbers are estimations, but it wouldn't surprise me if they could reach profitability without SDC's.
There's a difference between making it work for a small suburb area in Phoenix some of the times and making it work everywhere all the time. And the problem with ride-sharing applications is that unless it works everywhere nobody is going to use it.
Making it work everywhere for all circumstances is hard. Like really hard. There's a difference between an intervention-free ride and an actual ride that's both safe and comfortable. You could rack up your miles per safety intervention by programming a paranoid robot that sits at a highway ramp for hours without merging.
Is it possible? Maybe. It's nice that some deep models can magically (with no theoretical explanation) recognize a pedestrian, a vehicle, a bike. But would you trust it with your life? There's no theoretical safety guarantee unlike aviation where you can actually read and understand the proofs. I mean yes it could certainly work somewhere some of the time, but believing that it will eventually work everywhere all of the time is rather naive.
That doesn't seem to be true...
> 4. Uber expects that its users will stick to it over the course of years in the face of significantly cheaper competition.
What significantly cheaper competition?
Furthermore, a completely robust SDC able to handle all climates and weather in which a human driver is at least nominally competent to drive is still likely a pipe dream. So this model may work well - if it works at all - for the Southern regions of the US, without coverage anywhere else.
FWIW from conversations with some of the scooter rental app devs, apparently the scooter / ebike on-demand rentals are extremely profitable.
The human driver still has a minute. It's not like we are talking about Semi Trucks that will primarily have to navigate interstates.
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 before Waymo's paid off its investment in its first crop of self-driving cars.
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.
So I'm not following this closely, but why is Uber unprofitable? I mean the app worked last time I was in the US and surely can't be that expensive to develop and maintain.
Can't they just get out of markets that are loss leaders and continue to operate in profitable markets? Note that they should but that's always an option if profitability becomes an immediate issue.
Uber vs Waymo will be inetersting for sure.
Just like in cycling, fast followers have it a lot easier in getting a % of the market share.
zoinks