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Uber Loses At Least $1.2 Billion In First Half of 2016 (bloomberg.com)
An anonymous reader writes: The ride-hailing giant Uber Technologies Inc. is not a public company, but every three months, dozens of shareholders get on a conference call to hear the latest details on its business performance from its head of finance, Gautam Gupta. On Friday, Gupta told investors that Uber's losses mounted in the second quarter. Even in the U.S., where Uber had turned a profit during its first quarter, the company was once again losing money. In the first quarter of this year, Uber lost about $520 million before interest, taxes, depreciation and amortization, according to people familiar with the matter. In the second quarter the losses significantly exceeded $750 million, including a roughly $100 million shortfall in the U.S., those people said. That means Uber's losses in the first half of 2016 totalled at least $1.27 billion. "It's hardly rare for companies to lose large sums of money as they try to build significant markets and battle for market share," said Joe Grundfest, professor of law and business at Stanford. "The interesting challenge is for them to turn the corner to become profitable, cash-flow-positive entities."
How is this a related link "10 Confirmed Dead In Shooting at Oregon's Umpqua Community College" to every article I look at, even this one?
"It's hardly rare for companies to lose large sums of money as they try to build significant markets and battle for market share,"
How long did Amazon lose money? Uber's just collecting data until they can get rid of the drivers and their cars and move to their own self driven vehicles using the infrastructure they're building now.
They are in a market where the bar is so low that anyone with a car and access to craigslist can set themselves up as a ride-hailing business. Apparently you don't need commercial license, vehicle inspections, or liability insurance. They are nothing but a 99 cent app and a marketing department - no special sauce.
As the summary notes, breaking into an existing entrenched market is extremely expensive.
Especially when you're trying to upset the status quo.
We'll see if Uber is still around in 5 years.
I would still love to be one of those private investors. Uber is going to be huge. It already is. Although Slashdotters like to whine about it, Uber has improved taxi service for the common person. Yes, Uber is a taxi service. And yes, it is cleaner, safer, more efficient and cheaper than other taxi services. And stop the bullshit claim that the drivers are getting ripped off: if that were true then they wouldn't be doing it. Uber drivers aren't idiots.
Maybe, just maybe, Uber's infrastructure is more complicated than a "few servers."
If you're scared of your govt then you need to further restrict its powers
Vote 3rd Party in 2016 and beyond
They are a taxi company. Offering prices lower than the market rate. So of course they are losing tons of money.
Their goal is to roll out self-driving taxis before they go bankrupt. If they succeed in being the first company with self-driving taxis, they will become incredibly successful. Because of this possibility, they have attracted a huge amount of investment. This allows them to lose lots of money for a long time without going bankrupt.
In the short term, customers are winners from Uber's lower prices (disregarding legal/ethical issues, which are real, but tangential to my description of the business model).
Investments. Self-driven cars. Software. And I suspect a lot of expenses from the leaders. Keep your tears, though.
Slashdot, fix the reply notifications... You won't get away with it...
How can a taxi company with literally no expenses except for keeping a few servers running run a loss in the billions?
Uber spends far more money on marketing and ride subsidies than on running their servers. They undercut taxi companies by simply losing money on each ride in many markets. The claim is their costs would go down once economy of scale raises, but there is also a good chance prices would go up significantly if they ever win their battle with taxi companies.
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
Normally companies use "earnings before interest, tax, depreciation, and amortization" to make it look like they are profitable when they really aren't. It's not recognized as a proper measurement of profitability by generally accepted accounting principles. In the words of Warren Buffett, "Does management think the tooth fairy pays for capital expenditures?"
How the hell do you lose $1 billion when you don't actually do anything? Can't uber just be run with a server and a handful of people?
Others have compared Uber to Amazon, but Amazon had real, huge cost drivers: They needed stocks, warehouses and logistics. Even so, and even given their aggressive growth, they never lost this much money - I think the record was around $1 billion in one year. Uber is purely a service, with essentially no capital costs and no logistical infrastructure. They are an app and a money conduit. How can they lose $1.2 billion in six months?!
They attribute the losses to subsidizing drivers, i.e., paying drivers more than the passengers are charged. I can see that on a local scale, over the short-term, as they attempt to gain a foothold in a new market. To do so on this massive of a scale? Insane!
Of course, another aspect is salaries. Why does Uber need 7000 employees? They need a technical team, they need marketing droids and lawyers. But...7000 of them?
Something here does not compute...
Simple: driverless cars. Survive long enough to get driverless cars perfected, dump your largest cost (driver pay), and there you go.
but the second mouse gets the cheese. Uber may survive being one of the early distributed ride hailing services, but the danger is that the spend so much money in the process that they go bankrupt and only the name will carry on after someone buys it in a fire sale when the company assets are liquidated.
Is it just my observation, or are there way too many stupid people in the world?
Uber spends far more money on marketing and ride subsidies than on running their servers. They undercut taxi companies by simply losing money on each ride in many markets.
And also by paying less in taxes and licenses than competitors.
Uber is not a tech company. It is not a taxi company either (the drivers are, though). It's a lobbying company.
but there is also a good chance prices would go up significantly if they ever win their battle with taxi companies.
This is the only reason why Uber investors accept loosing that much money now. They want a future monopoly with higher prices.
There is no brand loyalty.
Don't underestimate the network effect.
People use Uber because there are drivers. Drivers are on Uber because that's what people use.
When executed successfully you'll have an unprofitable market all to yourself.
Uber CEO Travis Kalanick is worth over $6 billion. The loss belongs strictly to the investors. The company's doing fine, otherwise.
This is why Uber is not a public company. It's a money laundering operation.
http://www.cnbc.com/2016/03/28...
http://investorplace.com/ipo-p...
You are welcome on my lawn.
But they make it up on volume, right?
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
This leads me to ask.. why are people pushing the idea that we need to advance technologically when we are clearly not headed for the kind of world that is better for more people here. Do we like shiny new things that much, that we would sacrifice our entire place in the economy?
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
Admittedly,
I don't understand how Uber works, as I'm not a driver. I assumed you paid an Uber driver to take you from point A to point B for some amount. The driver kept some percent and the rest went to Uber.
How does Uber lose money on this transaction. Or, more to the point, how does Uber lose money on each ride?
I have the same question as the parent post. It seems like Uber is an App that provides a matching service between driver and rider. Aside from Uber employees, servers, and whatever administrative costs they incur to keep the thing running, what else is there? I can't imagine how they can hemorrhage this kind of cash.
It seems like they should be raking in the money. As near as I can tell, Uber is basically collecting a royalty on ever ride that takes place.
What are we missing here?
So now we have come to google doing "real business". So much for mining, farming, and manufacturing.
Yet look at all the people praising Uber now for their lower prices.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
What are Uber's expenses? I can't imagine it costs $1 billion+ to run a phone app. Let along lose that much when they make money on every ride.
Exactly how much cocaine are they paying their execs?
Or is all in court cases and bribes to local officials?
Help! I'm a slashdot refugee.
I don't understand how Uber works, as I'm not a driver. I assumed you paid an Uber driver to take you from point A to point B for some amount. The driver kept some percent and the rest went to Uber.
How does Uber lose money on this transaction. Or, more to the point, how does Uber lose money on each ride?
The passenger pays the fare in the app, and the driver gets a percentage of the fare. In some instances, Uber will pay the driver more than the fare, otherwise known as ride subsidizing.
This is mostly done to get more drivers into a new market. Uber has a chicken or the egg problem in new markets (like China) so they need to pay a premium to drivers when there are few passengers. They might have to pay a driver $50 per ride because they will only have 2-3 rides per day, even though they only charge $25 per ride to the passenger. In this state there will usually be far more drivers than passengers, so the level of service is excellent. Soon more passengers install Uber in this city, and once drivers can get 10 fares per day their payment per ride can go down to $20. The price per ride can probably go up a little too since they don't have to undercut taxis as much once Uber becomes more ubiquitous.
Uber spent around a billion dollars per year trying to break into the China market this way (plus many other similar strategies and marketing costs).
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
maybe in your town. Globally, Lyft is far from Uber.