
Uber's Losses Reach Double Digits in IPO Debut - AndrewBissell
https://finance.yahoo.com/news/uber-shares-decline-second-day-091656484.html
======
andrewla
I don't know why this is portrayed as a negative -- this is the whole point of
an IPO. If the price goes up significantly, it means that the company lost out
on capital that it could have raised. If the price goes down, then it means
that it extracted more capital from early participants than the market at
large thought was justified. It's far preferable, for the company, to be in
the second bin than in the first.

If they need to raise more capital in the future, then the higher the stock
price is the less dilution is needed for the same amount of money, so
eventually they want the stock price to recover, but for now they're sitting
pretty on top of a pile of cash that they got despite what the market seemed
to indicate.

~~~
woodrow
Keep in mind that employees whose RSUs settled on IPO day are taxed at the IPO
price, not the price when the lockup period ends.

~~~
jedberg
Since the lockup expires in the same tax year, can't they just sell after the
lockup, take the loss, and then use the loss as a write off against the RSU
gain so they only pay taxes on the actual realized gain?

~~~
woodrow
The initial RSU settlement is taxed as ordinary income. If they sell below the
IPO price in future (e.g. to cover their remaining taxes) they'll indeed
realize a capital loss but it can only be carried forward against future
capital gains from e.g. longer-term holding of UBER or another stock, or using
the $3000/year deduction for ordinary income.

------
SeeDave
I consider the Uber IPO to be a 'bookend' on what has been a dozen years of
insanity in Silicon Valley. It started off so promising with the sale of
YouTube to Google in '06, but it started to feel increasingly 'off' in the
early '10s with Groupon and Zynga. Color app was the first canary from my
perspective.

Again, this is just one guy's opinion but it has been a hell of a spectacle.
May we all find chairs when the music stops...

~~~
mimixco
Color! What a wonderful story of failure. Thanks for the reminder.

~~~
antoniuschan99
Remember when it raised $50 million and people thought that was a lot of
money?

------
xrd
Lots of people have commented on this impacting retention of current employees
negatively, and that this will make it hard to invite new employees to Uber.

Aren't both assertions off base?

If I'm a current employee, I'm underwater. And my tax implications are scary.
So, am I not motivated to stay and let things recover, rather than walking
away when I vest after six months? Like golden handcuffs, but made out of
feces or something?

Given the alternative, for Uber management, isn't this moment of the stock
going down a good thing generally for retaining the big fish at Uber?

And, for new people, isn't the calculus for the recruiter pretty easy: hey,
jump in now, the stock is really low, get in while you can?

Long term this has big implications for Uber if they need to raise a few more
billions, but that's a big problem no matter what, right?

~~~
fragmede
For said big fish, they can say to the new company "hey, I have this much
value locked up, which I'd lose by moving to your company, you'll at least
need it match it, for your offer to be competitive."

~~~
ianferrel
"My Uber stock is currently worth -$3.2 million." Is probably a value that
many competitors can meet. :)

~~~
xrd
My point exactly: the competitor can say "Let's give you a $0 signing bonus,
it's a $3.2M bump over the value of your Uber stock!"

------
dandare
What is Uber's competitive advantage anyway? Subsidizing rides with Saudi
money? The mobile app is pretty simple and competitors are popping up wherever
you look. There is almost no cost to switch for the end user and all the taxi
companies will end up competing on price. I don't get it.

~~~
chenyangli
It's true. There is not any technical bars of ride-sharing app.

------
outside1234
Its going to get worse too before it gets better - you know the underwriter
was in there manipulating the market the last couple of days trying to prop
the stock. When that's gone, look out.

~~~
eganist
The same could be said for the Facebook IPO (propped up, etc), but Facebook
recovered after they demonstrated success in mobile advertising.

Not really offering a counterpoint here so much as I'm saying this has played
out in the past with an ending quite a ways different from what's being
foreshadowed here.

~~~
bdcravens
Uber could possibly find an opportunity like that by expanding their delivery
options beyond restaurants.

~~~
Balgair
Like bike-messengers, but with vespas and 4-doors? Isn't that a super crowded
and niche market anyways?

~~~
mertd
Last mile logistics is a huge market (FedEx, UPS). On-demand last mile
logistics as opposed to once/twice a day delivery is likely a lot smaller.

~~~
treis
Only because it's so expensive. There's probably a lot of demand to pay $5 to
skip a trip to the store or get food delivered. If Uber gets it to the point
where a driver's trip encompasses retail goods, restaurant food, and a
passenger at the same time the business looks pretty good. Tough to get there
of course.

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tinus_hn
The market as a whole has done really bad during the period Uber has been
trading, which is unsurprising as someone is introducing uncertainty in the
form of a trade war.

------
danans
The steep decline (vs. the market at large) so far today seems like a
reflection of an investor flight to security (and away from risk) during a
highly volatile situation the stock market.

Curiously, another recently IPO'd company, Beyond Meat, is currently _up_
3.75% on the same day that ride-share companies are down 7-11%, and the market
at large is down 3-5%. That suggests that investors at least, have some pretty
high confidence in alt-meat companies.

------
golover721
Honestly everyone needs to chill out. The markets on Friday and today are
extremely negative and volatile in general. This was a very tough week to IPO.
Market negativity or positivity is amplified with freshly listed stocks. We
won't really know what the market thinks of Uber for a few months at least.

------
human20190310
Will a perception that IPOs are now quite risky cause VCs to push for earlier
or later IPOs?

I can't figure out if it's in their interests to keep funding these companies
privately for a longer period, or bite the bullet and push for an IPO sooner.

~~~
b_tterc_p
They likely want to IPO ASAP in response to expectations of a looming
recession.

------
gumby
Good job Uber for maximising capital raised for development of the company.

Unfrotunately for them (this is not sarcastic) they have built a machine that
hasn't had a focus on profit. It's hards to change that after years.

~~~
mrnobody_67
That's what every round of VC incentivizes: Here, take our money and spend it
in 12-18 months, so you'll need to raise more money from next-round investors
and we can mark-up the value of our stock to show to our LPs, so we can raise
our next fund and collect more management fees....

------
duxup
So they raised something like 8 billion (I forget the exact number)? So they
have that cash.

Are there any immediate impacts for a company regarding a price drop after an
IPO?

~~~
AndrewBissell
Once they burn the $8B and have to return to the markets for more capital, the
terms start to look much worse. It's also pretty bad for employee morale if
the only people who get a decent exit from their shares are the VCs &
founders.

~~~
bogomipz
Might you or anyone else know how big their float was on the IPO? Wouldn't the
market punish the stock if they went back to the markets for a secondary
offering too soon? For that matter what would even would be considered too
soon? If they were to sustain their current loss rate wouldn't they have to
return to the market sooner than later? Or are there some other instruments
available to them that would be preferable to a secondary offering so soon
after the IPO?

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m_ke
How long before they get acquired by Amazon? Also what are the chances of that
deal getting blocked?

Getting all of these uber drivers to deliver packages, groceries and food for
amazon customers makes too much sense.

EDIT: Looks like Amazon is already making moves in that direction with their
own employees
[https://news.ycombinator.com/item?id=19901196](https://news.ycombinator.com/item?id=19901196)

~~~
lalos
The drivers are not loyal, they are already on Lyft and whatever app offers
them a better deal that day/week/month (depending on incentives they sign on
to).

~~~
m_ke
Yes, they're loyal to whoever pays more and has more work. Slapping Amazon
deliveries on top of Uber pool would mean more work and better unit economics,
which should ideally translate into more money for the drivers.

~~~
darkwizard42
Surprisingly the background of drivers who do deliveries and food is very
different from what is legally required to transport humans. What has been
found is that there actually isn't much overlap in competing "supply" as those
who are clean on background and DMV checks will always pick transporting
people first because its more profitable.

~~~
dractori
Source?

------
uberdru
The public markets aren't particularly efficient, but they can be ruthless in
sniffing out irrational enthusiasms.

------
voodooranger
if everything is a debacle then nothing is a debacle. what word are
journalists going to use when there’s an actual debacle?

~~~
jressey
This one is certainly a debacle. Uber was the 1 unicorn left. There is no
other darling startup that's gonna be scratching $100b anytime soon. This IPO
failure ended the crazy run of cash since the '08 crisis.

It was also a debacle because anyone who is not an idiot sees that Uber is
doomed. You think their little GPS app is actually an advantage with respect
to self driving? There is no barrier for entry, none. They are as likely to
lose as they are to win, if full automation is actually a viable technology in
the next 10 years (it isn't).

~~~
ipsum2
I thought "unicorn" referred to anything >$1 billion. Slack IPO is rumored to
come soon, their last valuation was >$7 billion.

~~~
jressey
I have heard that but it is my opinion that companies valued >= $1B are
becoming a dime a dozen. I work at one climbing that ladder and we could be
displaced in 6 months by a better implementation.

------
chenyangli
The problem is people joining Uber only for becoming rich quickly.

------
legohead
Has there been a big IPO that didn't fall? It seems like shorting these is the
obvious thing to do, but I admit ignorance when it comes to investing.

~~~
warp_factor
The vast majority of IPOs are successful and pop on opening.

Failing IPOs are the exception , not the norm. There were two very high
profile failure lately (Uber and Lyft) so I understand why you are feeling so
though

------
chenyangli
Uber stock will touch $25

------
jshowa3
About time a profitless company gets what it deserves. I've been concerned
with endless VC funding for years.

From what I've seen, most current tech companies are not doing well going
public. I remember a similar lukewarm response when Snapchat went public.

In fact, I probably would've advised them to stay private. Tech companies have
seemed to survive indefinitely bleeding VC money.

My guess is the stock will probably recover after a couple months.

~~~
treis
>About time a profitless company gets what it deserves.

Yes, a 63 billion dollar market cap is sure showing them!

>Tech companies have seemed to survive indefinitely bleeding VC money.

That's somewhat of the issue here. The outcome for VCs at this price is still
somewhere between massive return and breaking even. It's the public at large
that bought into the IPO via retirement funds that is hurting the most.

~~~
mfatica
I highly doubt in the few days Uber has been on the market the "public at
large" has purchased any significant share of Uber using their pension
accounts. It's not in an indices so they're certainly not exposed through
that.

~~~
treis
I said the public at large via retirement funds. Teachers get less because
CalSTRS lost money* either via direct purchase or through asset managers.

* Just an example I don't know if they bought into the IPO or not.

~~~
throwaway2048
Large index weighted funds don't buy into IPOs until significantly after the
fact.

~~~
jpmattia
Really? For the CalSTRS example, they issued PR that they bought into the FB
IPO, and had also bought into pre-IPO private companies.

eg:

> _CalSTRS has owned shares in Facebook, Inc. since its initial public
> offering in 2012, as well as through privately held assets prior to the
> IPO._

[https://www.calstrs.com/statement/calstrs-ongoing-
engagement...](https://www.calstrs.com/statement/calstrs-ongoing-engagement-
facebook-focuses-risk-mitigation)

~~~
mfatica
Something run by California was mismanaged you say? I'm terribly shocked

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edoloughlin
_Before you continue... Yahoo is part of Oath. [...] Select 'OK' to continue
and allow Oath and our partners to use your data, or select 'Manage options'
to view your choices. _

More Oath BS, where _Manage Options_ leads you on a merry dance and does
absolutely everything except allow you to manage any options.

I'd love to see Oath sites banned from here.

~~~
nicolaslem
I always open these links in a private window, accept all the tracking, read
the article and close the window.

~~~
yomly
Piggybacking on this (as I do it too) how robust is this method?

~~~
tormeh
You've just given them permission to fingerprint you. If they're good at what
they do then the private window trick had no effect.

------
skookumchuck
> Uber Technologies Inc. shares extended the free-fall on Monday

Everything was in free fall on Monday. Nothing noteworthy about Uber going
down too.

~~~
slumpt_
Found the Uber employee.

~~~
dang
Personal attacks aren't ok here. Would you mind reviewing the site guidelines
and following them when posting to HN?

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

