Uber Sinks to New Record Low as IPO Share Lockup Expires

It's still a 45B company...still the largest and most successful company to come out of SF this decade.

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.

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.

>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.

”self-driving car fleet ”

Uber has zero competence in fleet management. Everything they do is to avoid investing in a fleet.i would argue that rental car companies or car dealers are positioned much better.

Uber is a huge mess because the narrative is not credible. Dara is trying to tell a story about fast grow + profitability.

The reality is that they have three types of businesses. 1. Businesses that are slowing down dramatically, e.g. Ride Share. As they raise price it may have negative growth. 2. Businesses that are growing by unsustainable subsidy, e.g. Eats, Freight. 3. New business that are purely speculative. Uber Money, Autonomous, Flying Taxis.

They have no businesses that fit the fast growth + profitability. Dara is trying to balance the three categories above to pretend that it is happening.

This reads like the usual Uber criticism and doesn't touch on the lockup. The market knew the lockup was ending, so it should have been priced in. Dropping when the lockup ends should mean that markets underestimated how many insiders wanted to cash out, and employee sentiment is worse than market sentiment.

> We knew that their future was purely dependent on a self-driving car fleet

This is by far Uber's best trick. Convincing people that there is an end game they can win.

I see no way that self-driving saves them. Either they'll have to buy/lease/maintain a massive fleet of cars or they'll have to rent self-driving cars from the owners. Either way, in the near future, how much cheaper can it be than paying humans peanuts?

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

I've never really understood this.

Their drivers do more than just drive, don't they? They also supply the cars, and deal with maintenance of those cars. If Uber switches to a self-driving fleet and ditches human drivers, who will own the cars?

If Uber owns or leases the cars, Uber will have to be dealing with maintenance. I suppose they could go to a model where people who have bought self-driving cars can let Uber use them when the owner does not need them, but then Uber has just replaced paying a zillion drivers with paying a zillion self-driving car owners.

So, assuming they go with the model where Uber is the one handling maintenance so they don't have to have a zillion pseudo-employees I don't see what would stop other companies from doing this better.

If Waymo wanted to go for that market, for instance, they have better self-driving technology, and could probably get integrated with the Google Maps app that is already on everyone's phone so they wouldn't have to convince people to download anything. Sure, Waymo doesn't currently have, as far as I know, anything set up for managing and maintaining a large fleet of cars...but neither does Uber.

Or what about the car makers? Many of them are working on self-driving, too. I could see some of them deploying self-driving taxi fleets, with maintenance handled through their dealers. This could become a new sales channel for them--new car to their taxi fleet for a couple years, then sold off as a used car which the buyer can be assured was well maintained and still has a good warranty.

Imagine your self-driving Audi/BMW/Mercedes/etc taxi dropping you off at home at the end of the day, and then presenting you with a report showing how much you used the service over the last year, how much it cost you, and how it would have been cheaper for you to have your own private self-driving car, and offering to sell you that very car. If you accept, the car drives back to the dealer, gets cleaned, inspected, tuned up, and drives back to your place to be waiting for you to take ownership the next morning.

In summary, owning and operating a fleet of self-driving taxis is sufficiently different from what Uber does now that I'm not sure that Uber has any particular advantage over anyone else who might want to do so, and might even be at a disadvantage, so I'm skeptical that this is their future.

No everyone on HN didn’t know that. Posters on HN are routinely making excuses for money losing tech companies and consider a “success” another rounding of funding at an increased valuation and being able to pawn off bad businesses to the public markets.

I mean, if no one was surprised the stock price wouldn't have moved a lot when the lockup ended. Clearly most everyone was surprised (including you), otherwise you and everyone else would have shorted Uber or bought some puts before the lockup ended therefore neutralizing any price movement.

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 near term?

Part of the misunderstanding, at least as I understand it, is that for a growing company the vast majority of the expected earnings come a very long time in the future.

Peter Thiel talks about this for Paypal in Zero to One, IIRC in 2001 their projections showed that like 75% or more of the net present value would come in 2011 and beyond.

I don't actually know how you make a model like that, clearly you need to assume a maximum size and a decline at some point in the future or else you would expect infinite future revenue? But obviously people are doing that, amonth other types of models for Uber and deciding it's still worth $45 Billion as of today. If not the stock price wouldn't be that high. I think the reason you don't see it is just that it's more advanced than what a regular journalist is going to do, and I assume you're not paying for the right specialist publications to have access to that level of reports.

If you still think it's completely crazy, then what are you waiting for get out there and short the stock, there's free money to be made!

I'm surprised it isn't much lower. Maybe people holding the stock are too "pot-committed" to sell at this point?

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.

Slightly up from the open but still down majorly from yesterday. Are you in marketing?

I wonder how much cost offloading was done to make ridesharing look profitable and everything look like a loss. Uber needs a positive narrative of some kind

but I think lyft is losing even more money (scaled)

Does that include the driver incentives that are counted under marketing spend rather than subtracted from revenue as they should be?

>From Q3 results, it sounded like the company was profitable just on ride-sharing itself and was losing a ton of money on eats + cargo + autonomous vehicles R&D.

Only if goofy non-GAAP accounting is the standard (it's not).

The company claimed to be profitable on rude sharing on an “adjusted EBITDA” basis. Which is basically a made up metric where they excluded over a dozen expenses.

I was at Groupon at IPO. IPO’d at $20. Dropped to $3.50 by the time lockup ended. I sold because I needed the cash. 7 years later, it’s trading at $2.90. The market isn’t perfect, but shenanigans with private company valuations are usually worse.

Take granto’s advice.

> There has gotta be a better way to make American cities more livable and accessible without adding additional car traffic.

This problem and its solutions are not new. The solutions weren't implemented because there wasn't enough desire to implement them, and I doubt that has changed today.

American culture pushes the idea of personal vehicle ownership equaling success, and if you have a car you're going to drive it instead of taking the subway.

I don't know what you think can be done, because all the "solutions" you offer are just plain unworkable and unfeasible. Ride sharing, aka taxis, was a solution to that problem even though it may have not only just been a con job to take over the taxi industry in every single city and town, but it also surely led to people using Uber instead of walking a few blocks. That may have abated a bit since the introduction of scooters, but even though that also "hurts public transit", I will leave that be.

The reality is that public transit hurts public transit way way more than anything else, just like taxis not only destroyed themselves, but they alone made Uber/Lyft even possible. Just like without taxis being an utterly miserable experience in most cases (which clearly has now been normalized in U/L to some degree) made people flock to U/L even with efforts like Curb (and whatever they were called before that) in addition to some other efforts to organize taxis in an app; so is and did public transport sabotage itself too.

People who advocate for public transport (and I must assume that includes you) tend to not at all understand the true costs and issues with public transport beyond the obvious ones like subways/trams being stuck on rigid lines or busses that are limited in their route. What those people do not take into account is even just the full financial cost of operations, not even to mention future obligations due to unfunded liabilities/benefits for utterly unproductive/lazy government employees, and all the accompanying authoritarian/tyrannical gaslighting propaganda that comes with it, e.g., "how dare you point out or note the crimes and violence on BART. You are a horrible person for not subjecting yourself to it". But reality is that, e.g., the NYC subway system is HEAVILY subsidized, which makes it so "cheap", just like all the European public transit is even more subsidized and makes it even "cheaper".

Just for example because I was looking at the figures recently, the WashDC Metro system only receives half its operational budget from fares, and the other half is drained from surrounding counties and the city of DC. And that is at a cost of commuting to and from work into and out of the city of about $7.5 every single day, partially due to recent fare increases. That's ~$2,000 per year to commute to work when one is to believe that being jammed into busses/subways should produce some kind of savings over owning and operating a car, which would clearly not cost $2,000 in costs for commuting per year unless you are talking about a mid sized luxury vehicle.

You are wildly mistaken, at least regarding Europe, why U/L are doing poorly. They are doing poorly there because the people still care about maintaining a line against the very "disruptive" types that SV and YC for that matter is full of. People in Europe at least for the time being still have a shared common bond to maintain the line against pure capitalists that have demoralized and broken through that line in the USA in particular, where no such bonds of unity and common interest exist anymore to hold the line against the abuses and excesses of the pure capitalists like basically all the tech companies are. Uber is, ironically successful in the USA specifically through abuse, fraud, manipulation, deception, plunder, and degeneracy. Like I said, at least for the time being, that defensive wall has not yet been broken trough yet in Europe, even though it surely is coming, with the invasion of the same kind of foreign low wage serf labor that fuels U/L.

I live in London. It's not dense, but has (supposedly) good public transport... tons of busses, taxis, and probably better underground network than most other EU cities.

Uber is still a blessing. Cheaper than cabs, better managed (I can order it anywhere, monitor its progress, don't need to care about payment, ...).

Don't get me wrong, I think the company is pretty shit, but the service is extremely valuable!

Direct listings don't have lockups. Spotify and Slack have used this method to go public in recent years.

The stock prices of those two companies don't seem to have benefited much from the immediate liquidity though.

> I doubt it, since they’re primarily there to ensure the original investors get an ROI, but they sure seem to be an overall negative incentive for the general public / retail traders to purchase stock with lockup agreements, given the earliest they can buy is right when the IPO pops.

That seems slightly backwards. The lockup protects buyers in the IPO more than sellers: it means you can be confident that the market isn't going to be flooded tomorrow. Anyone who bought in the IPO has now had plenty of time to get out, if they wanted to.

It's crazy that in 2019 investment banks are still using such a blunt instrument to manage shares becoming available for trading. It would be trivial to let insider shares trickle out for some period of time enabling insiders to monetize while avoiding a plunge.

Doesn't appear HN is particularly negative about Uber:

https://hnprofile.com/compare?search=uber,lyft

I'm curious, anywhere where I could read more about the high/low statistics?

The amount of RSUs isn't that large compared to the company valuation.

Or you could just look at what happened with WeWork employees as a recent example. I don't see why anyone (especially in your 20s with significant net worth tied up) would hold onto this once the lock is up.

Which specific companies surprise you? Employees selling their RSUs is a drop in the bucket vs the market cap.

That’s a pretty cynical and inaccurate way of looking at it. They did create hundreds of thousands of part-time to full-time jobs which presumably did not benefit only the 1%. They did drastically lower the price of point-to-point transportation, thereby massively expanding the market for it which presumably did not benefit only the 1%. etc

Riders and drivers who got subsidized rides and income, were probably the largest beneficiaries.

Uber employees, VC partners, on the Silicon Valley side. A lot of other tech workers have benefited from the upward price pressure exerted on developer salaries not just in Silicon Valley but around the world.

Who got screwed, if Uber’s valuation never recovers - late stage investors, companies doing similar things such as in food delivery.

Taxi and delivery customers benefited. That’s why there were 10 billion uber tickets sold in 2018.

Maybe siting in a taxi shouldn’t be a $100,000 a year job.

The only benefit I see between a uber driver and a licensed taxi driver is that the uber is exponentially easier to heil.

So much better than phoning some droll dispatcher for a slower service.

Licensed taxi operators used to do exactly same thing with a slower more expensive service.

If they were better Uber wouldn’t have sold 10 billion tickets in 2018.

Uber adjusts Taxi fares to supply of drivers and demand. Licensed taxi drivers restricted supply to charge the more for a worse service.

Uber can do this because they are a now a verb. Customers love Ubering and that’s all that matters.

If legislation changes to increase driver pay Uber will still have network, cost and brand advantages over it’s competitors in the growing taxi market.

Ignoring laws broke taxi cartels globally. I think that is forgiveable.

And they aren’t forcing anyone to drive Uber but uber does provide an low barrier autonomous employment option that never existed to millions of people. The fact this works in their favour is irrelevant because customers love Uber.

It’s not like there’s a training opportunity cost to driving uber. You use a car you have and know how to drive anyway and you drive it in your spare time or on a full time basis to deliver people or things. The cost to secure this employment is $30 for a police record check. Don’t even need to write a cover letter.

They mightn’t be the straightest company in the world but neither are taxi cartels so they had to go to the edge of the line to displace them for the greater good.

Hoovering is a verb, it didn't help them.

Edit: Xeroxing.

I feel they have too much money so they desperately try to branch out. Google is a Little similar. A ton of cool experiments but almost nothing turns into a real business.

it depends on whether you're trying to swindle regulators or investors, so it varies day by day.

It's a very common fallacy to think that previous stock price somehow indicates the future price. However, one should remember that whatever caused the price to fall in the first place, probably still exists, and unless remedied will continue to cause problems in the future. I like to buy stocks of companies that are in positive trend, reasonably valuated and have sound finances.

You might want to wait for some sign of a turnaround before assuming this is the bottom of the dip. Usual disclaimer about taking investment advice from internet strangers applies.

What about buying stocks in companies trying to have a positive impact on the world and not managed by megalomaniacs ?

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.

Most people who joined in 2015 were getting RSUs and not options. Also, the strike price on options is dependent on the 409A valuation and not the valuation at which they raised money.

They arent getting zero, they get the RSUs they were given and which vested. Sounds less dramatic that way. Still, many probably expected more.

i'd probably stay away from investing tbh

You are long on the new transportation model for taxi like rides but is Uber the right horse to bet on? I personally think not.

Yes, let's totally bring back the frat bros, that will solve most any business model problem.

Travis was removed for (among other reasons) being a rather massive legal liability.

I'll ignore whether or not it's morally sound to bring him back, since in the US putting reprehensible men in positions of leadership is par for the course these days. What moves would Travis make to attain profitability?

Remember that Steve Jobs helped Apple by killing a lot of products and simplifying their offerings. In the latest numbers release, rides were "profitable"; Uber Eats wasn't. I would agree that if Uber focused on the core product, and eliminated all the side projects, in the long run it would work best.

They don't need Travis. They need an adult in charge who will shed about 80% of their payroll. Managing a cloud-based mobile logistics service for taxis shouldn't require 22,000 people.

> taxis are dead

Not where I live. Where I live, taxis are beating the pants off of Uber and Lyft. This certainly isn't true everywhere, but it does show that taxis absolutely can compete with Uber and Lyft if they have their acts together.

Uber is taxis without regulation, nothing more.

There are other apps comings, and there is regulation coming as well.