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Uber Lost $800 Million In Third Quarter (cnbc.com)
According to a report from The Information (Warning: paywalled), Uber has lost more than $800 million in the third quarter. CNBC reports: The results, The Information reported, put Uber on pace to record an 25 percent steeper operating loss than last year, of at least $2.8 billion in 2016, before interest, tax, depreciation and amortization. Despite steep results from one of the world's most valuable start-ups, these results would have been worse if not for a one-time windfall thanks to the sale of Uber's China business to Didi Chuxing, The Information reported. On the bright side, Uber's revenue is skyrocketing, and its rate of losses slowed from the prior quarter, The Information said. Still, the report comes as Uber's multi-billion dollar valuation has come under scrutiny from those who say its business model depends on subsidies and faces looming battles over regulation.
Those of us who have been through dotcom 1.0's boom and bust know that there are patterns here - high stock valuations, no profitability, no real exit strategy, and hope of acquisition. What makes this time a bit different is that the ethics of the businesses are pretty challenged this time around.
With Uber, you get a company that knows it gets a free ride (no pun intended) on the people who sacrifice their personal vehicles' wear and tear that won't be fully covered by the money they receive, is schizophrenic when it comes to its disposition on whether its drivers are employees or contractors, fails to impose safety standards and inspections of both vehicles and people, actively encourages people breaking the law by not requiring their drivers to have commercial insurance policies on their vehicles and acting as a taxi company, and pretending to be an insurance company in violation of law by claiming they will self-insure for a million dollars of public liability without a certificate from the respective insurance commissions of the states they do business in.
Revenue growth isn't hard when you throw enough resources at something. A million average people will happily pick up something cheap or free and easy no matter whose expense its at. Profit growth is an entirely different animal. I believe when the legal chickens come home to roost, Uber will come out to be made out to be one of the biggest boondoggles in the latest dotcom boom. These days, there's a type of challenged ethics pervading the corporate culture of the new boom where people just go break the law and hope that things will sort themselves out. In the long run, it isn't the smartest business strategy in the world, and it isn't just Uber - and yes, I'm looking at you Theranos and Magic Leap. Even when the companies are legitimate, it seems the premiums people pay for them are ludicrous and defy the most basic business analysis of recovery of investment in a profitable way. I can't imagine this will all end well even if the magnitude of the failures are masked by inflation and currency devaluation.
Uber's vehicles are provided and kept up by empl..., er, subcontractors, company recognition is approaching ubiquity, and the rider software is already in place. The largest expense now is lobbying to keep what they do legal... in a thousand different places.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
If Uber went bust, the customers and drivers could just use Lyft, or conventional taxis.
To have a right to do a thing is not at all the same as to be right in doing it