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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.
There are two ways that I can see growth helping Uber:
1) They are expanding their locations; and using the profits of their existing locations to develop the new ones. At some point, they will stop growing, and the profits should increase.
2) If they are losing money in cities where they are well established, then by growing they will destroy the existing taxi industry; then they can raise rates dramatically and increase profits
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.
I love Mondays. On a Monday, anything is possible.
They keep breaking laws and having to pay out the ass in fines. Their model won't be profitable until they buy off enough lawmakers to get the regulations changed.
The big difference is that Amazon has pretty obvious infrastructure investments, what does Uber have? Aerons, hookers & blow?
As soon as they automate driving...
So Uber is good for at least 20 years. ;)
The big difference is that Amazon has pretty obvious infrastructure investments, what does Uber have?
They have access to practically free capital. With a market cap of $40B, they would be insane to slow down and cash in. Profits are irrelevant, at least for now. They need to get a lot bigger, and fast, to satisfy their investors, and keep the gravy coming.
Pardon my ire, but Uber's management has clearly demonstrated that they are interested in the exact opposite of sharing. They can go fuck themselves and stop pretending that they're interested in helping anyone other than themselves.
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.
"Access to free capital" is severely limited by expectations of an IPO or profits. How is this particular taxi company going to survive competition from other taxi companies, given that municipal governments all over the world are beginning to investigate Uber for unpaid dues? Uber can't pretend forever they are immune from paying taxes, fees, insurance and social security.
They've already shown they can grow profits regularly
[citation needed] with real, independently audited financial reports. What we see in TFA is exactly the opposite.
where they are allowed to operate
And where's that? They've been sued, fined and banned in all large markets. I know some detail about Uber pricing in two locations, and in both, the difference between the Uber taxi and all other taxis in both markets is just a little less than the difference between what taxi companies and individual licensed taxi drivers pay in license fees, insurance and taxes. That's it. Once they are required to play on a level field, they're gone.
All the other mumbo-jumbo in your comment is beyond ridiculous. What infrastructure, they have two apps, a few servers and a management interface, that stopped being an infrastructure problem about 2001.
Who rated this tripe Insightful?
Uber has a ton of infrastructure investment - it's mostly been clearing the way for the company to exist, legally speaking. They've already shown they can grow profits regularly where they are allowed to operate, so that is a way bigger deal than people are allowing for.
Not quite sure how they can be "growing profits" if the company is not yet operating in the black to start with.
User's infrastructure was MUCH HARDER to build out than Amazon's, which is just code and servers... Uber had to deal with real people - and not just people, but government officials.
"Amazon is just code and servers" -- I'll remember that next time the I hear about their sprawling warehouses around the world. And I guess they were able to begin operations in all those places without talking to a single government official, right? Not to mention the ~150,000 people they employ -- directly with W-2's, not as "contractors" as Uber likes to use to skirt many employment regulations. And that drone thing? Nah, FAA just preemptively mailed them their blessing for testing -- no interaction on Amazon's part needed there.
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.
I assume it's just fighting off the lawsuits. Their business model is fundamentally sound. Horribly, horribly vile, but sound. They find folks who recently lost a job and still have a decent car, declare them 'contractors' while forcing them to act as employees in all respects (can't work for anyone else, work when we say or we fire you, use our phone, etc, etc), don't pay benefits or unemployment. They get the benefits of employees without the responsibilities, which for a society like America where we're based our entire quality of life on your job ends fabulously for the employer.
Uber's just like Amazon. They'll keep getting money because if they can clear their hurdles (for Uber it's legal, or Amazon it's just killing brick n mortar) they'll be insanely profitable. If you're a billionaire investor then you can afford to wait it out.
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Yeah, everything is going to be automated in the near future! Idiot.
No, it's true. I read it on Slashdot.
There's only one Uber.
Using profitability in one market to distract the ship taking on water is an excuse for C-levels trying to calm investors. And are those profits growing in markets where everything is locked up and stable legally/politically? Or are these areas where Uber is just sneaking under the radar still?
Your comment makes no sense. Uber will only really take off when self-driving cars become mandatory.
SDCs would destroy Uber's business model.
Their entire business model is predicated on "not a taxi company, a rideshare Schelling Point company".
If they owned their own SDCs, they would immediately *actually* be a taxi company; it's the fact that they do *NOT* own a fleet of cars that makes their contracted drivers contractors, rather than employees.
It also means that the could afford to drop $1.6M to boot every taxi cab in Paris, making the hated "taxi cab traffic slowdowns" go away for a week, and gaining MUCH love among everyone but the taxis, who already hate their guts anyway.
It means they could spend $12.2M to set up every Uber driver with a Delaware Ride Contracting Corp., and deal with the contracting corps instead of dealing with the drivers, to ensure that they are *NOT* in a legal grey area with regard to employee status. Yes, they are employees... of one of a million Delaware S corps which THEN contract driving services to Uber... which ONLY employs contractors.
It means that they could spend $8.6M, and set up a wholly owned subsidiary that sells franchises to people who want to be drivers for "$1 and other valuable considerations", and then charges per unit plus a percentage for use of their scheduling network. And THEN they still ONLY employ contractors.
There's a lot of ways out of the regulatory mire of being considered a taxi service -- but owning a fleet is NOT one of them.
Except I don't want to be in someone else's car. Or let someone else in my car. I want to fit my child seats and leave them fitted. I want to have my shit in the boot that I like to carry just in case. The cost differential would have to be HUGE to make me not have my own vehicle, self drive or otherwise. As it is my car costs me $225 per week total cost. That includes everything from fuel to insurance to the financing costs and is based on 500km a week for a $50k car. A pool car would have to be under 25% of that for me to even come close to considering it and I would have to have almost no wait time ever. If I am having to wait more than 3 minutes for the car to arrive it is adding 50% to my quick local run the the shops and back. That alone would annoy me enough for it to not happen.
Oh yes they are immune, because it's all done over the internet.
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They're subsidizing the fares to gain market share. Customers are currently charged less than drivers are paid, so Uber's cut is negative. This makes it easier to grow because it lets them offer more aggressive pricing to customers, undercutting taxi fares, while still paying drivers high enough rates to rapidly grow their pool of drivers.
Their hope is that long-term they will gain enough market power to raise fares and/or pay drivers less.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
You're spending almost $1000/month on a car and don't think that it would be possible for a service to make that cheaper? I bike most places and take taxis everywhere else and spend a fraction of that - even taking a taxi with a human driver to and from work every day and would be cheaper than you're spending.
He's showing a total cost of $0.45/km. You can get Taxis for a fraction of that?
I've got a theory that the people behind Uber are the lawyers. Pickup a fight with every government and Uber has to bring their legal team in a very high billing rates to resolve the issue. Uber will never make money but the lawyers will be billing for ever.
Uber has a ton of infrastructure investment
In what way? Uber doesn't buy their drivers' cars, they don't buy their drviers' commercial insurance or practically anything else. What is all this infrastructure you mention?
I think the biggest difference is that Amazon didn't have to fight a retail mafia/guild on their way to the top.
Yes they did. And still are. The government is still trying to establish some sort of nationwide sales tax, and individual states have made Amazon collect sales tax if they have a presence in the state. But that is all just obeying existing laws. Uber is facing the same thing, having to obey existing laws. It is not the taxi companies trying to keep Uber down. It is the municipalities insisting that Uber's taxi service complies with the same laws and regulations as every other taxi service.
If you are not allowed to question your government then the government has answered your question.
They're called black sedans. A quick call will get tou a bery nice one in most cities.
I'm a consultant - I convert gibberish into cash-flow.
Nice arbitrage play! Seems like it'd be a little tricky to get away with, since Uber's app phones home with locations for them to track the progress of the trip. You'd have to run the app in a rooted phone that's running some kind of route-planning simulator, with enough nondeterminism that it looks realistic. But probably not impossible.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
But the people who demand the carry their guns wherever they go don't understand that they are crazy.
You don't understand that many of those people are demonstrably not crazy; that many of them chose to carry because of clear and present threats from which law enforcement could not protect them.
It's too bad that you're so stuck in your mentality of "power is bad". I would rather make people better than disempower them. Seems like all we focus on is how to stop bad people from doing bad things, and not on making people better. So if we take away the guns, we will have less mass killings... but will we have less killings? Mass killings don't substantially change the percentage of people who die, and the USA doesn't even have the most mass killing deaths per capita in the world... we're about in the middle of the top ten. All taking carried weapons away from people achieves is making people helpless.
I'm really glad for you that you don't have any serious, immediately, life threatening problems. That's great! A lot of people are not in your situation. While I don't carry my pistol, I bought a handgun to function as a nightstand weapon so that if my alcoholic, out of control father showed up at my house again and escalated from threats to violence, that I could protect myself and my lady. He told me repeatedly how many ways he knew how to kill someone with his bare hands etc., to the point that I feared him. And he was completely out of control, and quite dangerous. My family has a history of violence, in which I have never been involved. One of my brothers stabbed the other one in the neck, for example.
I'm glad your life is so functional. But other people are trying to make the best of a dysfunctional situation, and you think they're crazy. Maybe it's a crazy world. Nobody should ever have to fear injury or death at the hands of their own parents. And there's lots of people whose problems are way the fuck worse than mine. And you are sitting on top of a very tall, very secure ivory tower, and pissing on the people beneath you. You don't get a medal.
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