That story about the pizzas was crazy. Especially the end where you have the doordash driver in on it, just pretending to deliver the pizzas. At what point would Doordash notice? A thousand pizzas? A hundred thousand pizzas? A million pizzas?
https://themargins.substack.com/p/doordash-and-pizza-arbitra...
Not to mention some horrifying numbers:
> Doordash reportedly lost an insane $450 million off $900 million in revenue in 2019 (which does make me wonder if my dream of a decentralized network of pizza arbitrageurs does exist).
> Uber Eats is Uber's "most profitable division” . Uber Eats lost $461 million in Q4 2019 off of revenue of $734 million. Sometimes I need to write this out to remind myself. Uber Eats spent $1.2 billion to make $734 million. In one quarter.
- MSFT 10x sales
- V 17x sales
- MA 16x sales
- NFLX 9x sales
- BYND 23x sales
- ZM 68x sales
Some of those are obviously great companies with fat margins and well worth above average multiples. But ZM at 68x sales?
The market feels a bit out of touch.
[0] "At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?"
Try running the numbers on TSLA... they should be at like $300 on their best day.
More generally, the reason there are high valuations for companies that are growing users by selling a $20 bill for $18 is that they can drive out all of their competitors who can't afford to burn money. Once those competitors are gone, the survivor can raise prices, lobby governments for regulations that make breaking into the market very difficult, and generally employ anti-competitive practices to take advantage of their situation. If they're able to do this without being smacked down by anti-trust regulators they will be a money printing machine. These high valuations mean that the market thinks that governments will remain toothless and easily controlled. It's a depressing future to think about, but there's a pretty high probability that this is how it will be.
Which is a prime example why the whole business model is harmful for a capitalistic marked as it undermines any idea of "fair" competition and marked self balancing. (At least in a context where the money burned comes from an external source like e.g. VC, through close to quasi-monopoles spreading to new markets also fall into this category IMHO).
I think that they would notice at some point, and potentially trigger a fraud lawsuit - at some point the terms of service that all these people are agreeing to - would probably cover fraud. But even if not covered in the terms of service, one would probably still lose a lawsuit based on the fraud alone.
https://www.thedailymeal.com/eat/n-out-sues-doordash-deliver...
DoorDash issues something called a Delight card.It is basically a prepaid debit card.
I just can't see fraud here, only a giant company that is built on losing money intentionally creating a system that loses money with zero guardrails. Then people just... used that system exactly as it was.
https://www.bloomberg.com/opinion/articles/2014-11-20/the-go...