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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.
Imagine what they would lose if they had to face the same regulation and oversight as everybody else in the Taxi industry.
"That's the way to do it" - Punch
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.
Too bad they are not a taxi company, they could ring the Lost & Found department.
Actually I got the opposite question. How can they not be hugely profitable? In your example: Ubers cut is 20% of that $7, which is $1.40. For that they need to keep their system online and thats basically it as far as I can see. The driver needs to pay for everything to do with the car.
Uber is not a tech or a transportation company.
Hogwash. They are a taxi service. Nothing more, nothing less. Their money comes from taxi fares so that is what they are. They make good use of tech but that doesn't make them a tech company, it makes them a tech savvy taxi company.
They are a lobbying company.
That might have some validity if they actually received money from lobbying. Any lobbying they do is to facilitate their business model but it isn't the core of what they do. Anyway mostly they just enter a market and completely ignore whatever laws are there rather than lobbying to get them changed into their favor. That's not lobbying unless you have a very twisted definition of the term.
A lot of them are only making money if you ignore all of their fees. Between insurance, gas, depreciation, downtime, the full boat of taxes and everything else they often make far less than minimum wage.
You're special forces then? That's great! I just love your olympics!
Probably because Uber doesn't scale. The shitty shuttle really does cost $12 with a thin margin. Uber exists in a bubble where VC funding is being used to dramatically undercut their competition at thoroughly unprofitable rates. Once the competition does go away, do you really think that Uber would still be under $12?
You're special forces then? That's great! I just love your olympics!
And yet Uber has been losing $2 billion dollars on revenue of $1.4 billion. That's a a negative 143% profit margin. Good luck with that. https://ftalphaville.ft.com/20...
Do you know much about accounting.
Yes
Yes the sale of Uber's China's business would be included.
No it would not. The proceeds of a once off event like selling a subsidiary should not be included in OPERATING profit/loss, which is the $2.8 billion the article refers to. It will however be included in the NET profit/loss.
The CNBC article heading states "Despite China windfall, Uber on pace for 'unprecedented' losses, report says". The word "despite" implies that the operating loss was incurred even though they received a windfall from the sale of the Chinese unit. This is misleading ...
I have done a bit of digging since seeing this and have found that they did in fact make a $2.2 billion NET PROFIT for the quarter, as a result of the sale. Also the rate at which their losses are increasing has slowed because the Chinese unit is no longer contributing to those losses. The CNBC article doesn't make this very clear.
The drivers are making money. Try having a conversation with one sometime.
Not sure you really know what you are talking about. Also, define the "making money" when you answer this kind of question. To me, "making money" means the money your earning is consistent and significantly higher than a minimum wage after deducting all expenses involved in doing the business (car depreciation, insurance, gas, etc).
And yes, I did talk to my friends who are Uber drivers. Most of them made lower than minimum wage as a casual driver, and they are doing it for fun, not for money. If they really want to make money, they have to selectively go out during different surcharge at different places. Besides, they have to be lucky enough to get requests continuously. One of my friend who claimed that one night he was making money because he got around $260 working from 6pm until 3am. If you really think that it is "making money" for him, then you fail simple maths because that is close to a minimum wage after deducting depreciate of the car and gas.
...er, what does Uber (the corporation) actually spend money on to the tune of $800 million?
It's not like they're running the cars themselves - the owners pay for that.
I mean, their revenue trail seems pretty simple:
Inflow:
1) payments from users
Outflow
A) payments to drivers (should be entirely covered by 1, with some left over) and
B) maintaining the app & corporate overhead (salaries, etc for non-revenue-generating positions like accountants)
-Styopa
Or for $20 you could have had a 3 day bus ticket that would have taken you anywhere you wanted to. (Vegas has a pretty good public transit system). We rode all up and down the strip, took it out to UNLV's stadium, got between the hotel and the airport.
The 24 hour fare is $8. So for $4 cheaper than your shuttle and only a dollar more than your friend's Uber Ride you could have done as much travel as you wanted within 24 hours.
I average around $10 / hr. in my area if I only drive on Friday and Saturday evenings when the demand is high. This is counting up all of the time I am "online".
I usually park and read a book between rides, so if you only count the time I'm driving it comes out to a bit more.
Once I take out expenses and $0.54 / mile, I come out to a loss on paper. I have a vehicle with a low cost-to-operate, so I end up in a better position than other Uber drivers in the long run.
-- Stu
/. ID under 2,000. I feel old now.