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Leaked Documents Suggests Uber Is 'Losing Millions'
New submitter DaneTerry88 points out an article about the financial state of Uber, poster child for the sharing economy. Documents leaked to Gawker seem to indicate the company is still far from profitable, despite its popularity. "They show operating losses of more than $100m (£65m) in the second quarter of 2014, albeit coupled with steady growth in revenue." Uber did not deny the leak, but pointed out they are still building the business, which requires a lot of investment. The company has been valued as high as $50 billion, and only a few days ago received a $100 million investment from Microsoft.
The thing is, it's hard to see where Uber's costs are. They develop software, but that's a pretty small investment considering the hundreds of thousands of rides a day people take.
This is my question, i don't see how they are spending the money they are making as part of operational costs. While their model and implementation is interesting and novel and works, it isn't exactly one which requires a major investment, nor maintenance costs to run.
What exactly do they spend their money on?
'...if only "Jumping to a Conclusion" was an event in the Olympics.'
Government lobbyists and lawyers.
According to the Post, local lobbying registration records indicate the company hired private lobbyists in at least 50 US cities and states and has hired at least 161 people to lobby for its interests. In Sacramento alone, Uber spent $475,000 over five months to influence California lawmakers, the Post reports.
And that was nearly a year ago. Promoting and defending their disruptive business model against entrenched interests requires a lot of legal help.
This sort of mad rush for the finish line tends to upset the men in grey suits. But when you are in a gold rush you don't spend time making detailed maps, building beautiful camps for the miners, setting up a day care, and otherwise making everything perfect. You yell "Charge!" and run at the enemy with your sword waving above your head.
Even the business plan should simply read we don't really know and even then the plan will change. Love Uber or hate uber we must all admit that it is shaking things up. I recently took a normal taxi in my city from the airport for the "standard" $55 plus a tip. I took uber back to the airport for $32 and no tip. But also at the airport I asked the first driver what the charge was and he said, "Standard charge $75 same as everyone else." except that he was a "Limo" driver. So the first taxi driver in my new city lied to me and tried pulling a fast one. With Uber this sort of crap is massively curtailed.
So on this issue get back to me when uber has finished growing; if at that point they still don't have profits then it might not actually be an uber good business model.
With a market cap of $40B... Profits are irrelevant....
I know, right?!?!
Not only are profits irrelevant, the fact that there is not one share of Uber stock available for trade on any exchange is also irrelevant!
That's the thing about the "market cap" metric...stocks have to actually be traded (high volumes preferred) before the number means anything.