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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.
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.