
Uber Is Biggest Loser as SoftBank Counts IPO Returns - JumpCrisscross
https://www.bloomberg.com/opinion/articles/2019-08-07/uber-is-biggest-loser-in-softbank-ipo-returns-slack-turns-down
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vladojsem
I never understood the SoftBank investment strategy. It looks like they always
invest in something big and popular, prepared to pay a premium price - often
much more than it makes sense, i.e. WeWork.

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bobthepanda
$100B is way too big of a fund to be able to reasonably deploy. But Saudi
Arabia needs to invest in _something_ ; they're $45B of that $100B.

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skinnymuch
But WeWork seems like an overly stupid investment to make, no? Uber was a
calculated risk. But WeWork?? They better hope they can sell some stock at IPO
and WeWork’s stock doesn’t totally tank during the holding period. WeWork
could pretty easily result in billions in losses.

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empath75
WeWork just seems like outright fraud to me with a self-dealing CEO and with a
lot of liabilities in the form of long term leases that they will never make a
profit from.

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thedudeabides5
Well if there's no inflation.

Now, if we got some inflation, those leases would start to look pretty cheap.
Then the debt turns into equity, viola!

See lowering interest rates to 0 is fun.

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joelx
This comment was downvoted for snark, but the point is accurate. Inflation
could double rental prices and then all of Wework leases will be worth a lot.

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superwayne
Aren't leases usually inflation adjusted?

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piva00
In most places it's usually completely dependent on the contract, if you are a
big leaser (such as WeWork) you can leverage a lot of terms just by having
money and paying upfront.

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joelx
I have never seen an inflation adjusted lease in any of the commercial leases
I've done.

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rainyMammoth
Uber and lyft are both on the way down. The price at which they need to
operate to be profitable is not a price that most americans are ready to pay.
As simple as that.

For now they delay this reality by subsidizing rides in order to generate
business. In some cities like San Francisco, most incentives were removed and
among my friends we all stopped using Uber (unless we really have to). It
simply became way too expensive.

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tomp
What do you use instead?

In London, cabs are so expensive, even just looking at one is more expensive
than 30mins Uber trip... In addition, unless you're in a very touristy area,
your wait time for a black cab will be inversely proportional to how urgently
you need it; in contrast, I can just magically summon an Uber with the magic
wand in my pocket.

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ghaff
In the case of London specifically, there's a pretty good public transit
system. Most people also have legs they can exercise.

I'm usually in London a few times a year and I very rarely take a cab (whether
black or minicabs); don't think I've ever taken an Uber there. Usually only if
I need a very early run to the airport or if I have luggage to transport
between two locations where transit isn't super-convenient.

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tomp
I want to accuse you that "you don't live in London" but your comment admits
as much.

London has a huge sprawl so walking doesn't really make sense. A few biking
lanes but not really relevant for most commutes. Public transport is great if
you can use it, which generally means if you want to go to/from Central
London. Buses are notoriously unreliable and will "change destination" at a
moments notice. Yeah, the tube map looks "dense" on the map but see above for
sprawl. Good luck commuting in any direction other than radially (unless you
happen to be near an Overground line, which is a big if). In addition, most
tube lines are closed at night and many have repairs done over the weekend. On
top of that, late hours attract drunk / rowdy people, so I often prefer to
avoid them.

I'm fortunate to be able to use public transport for my normal daily commute,
but I also often use other modes of transport (my favorite is bike, which
public bikes make easy... again if you happen to find yourself near a station)
over the weekend if I want to get anywhere "interesting".

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cosmodisk
He's kind of right about public transport/walking. Apart from some outskirts
of London, the city has a pretty well developed public transport network. In
my case,if Uber will hike up the prices,I'd go back using the buses when
shopping or switch back to online ordering.

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bduerst
[https://outline.com/xHuVup](https://outline.com/xHuVup)

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aussiegreenie
SoftBank is not the loser but the various Middle East Wealth funds especially
the Saudi Wealth Fund.

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vm
They’ve made ~$15B on ~$65B invested. $15B!!! Ignore the sensationalist
headline.

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dannykwells
Source?

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vm
From the article. Investment dollars in and realized + unrealized gains.

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ojbyrne
How does this article start off with “masterful late-stage investment in Uber
Technologies Inc” and then describe all the ways it isn’t masterful?

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mola
It's dumb money. A bunch of irrational investors that seem to be influenced by
charismatic CEOs more than by actual business models.

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tim333
Dunno - the investment here is by SoftBank, run by
[https://en.wikipedia.org/wiki/Masayoshi_Son](https://en.wikipedia.org/wiki/Masayoshi_Son)
who doesn't seem too dumb.

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choppaface
Could they not put a collar on their Uber shares? Or is the options market for
Uber relatively small?

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jvm
Lockups typically do not allow any sort of options trading.

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sjg007
I’d be long on Uber. Taxis are still a bad experience. A recession is coming
too.

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zrobotics
Why would a recession be good for Uber though? A lot of Uber rides are
discretionary spending; even if they could get away with paying drivers less
their ridership would go down, no?

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40acres
Lots of people will drive for Uber during a recession to make an extra buck
perhaps the extra supply allows them to reduce subsidies and turn a profit on
a per ride basis (in more cities).

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zrobotics
As I said, they might be able to pay drivers less during a recession but if
total ridership is down they are still going to be in trouble during a
recession. If they have problems reaching profitability now I don't understand
how a recession will do anything but harm them.

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ghaff
And drivers are probably already somewhere around minimum wage a lot of the
time. Recession or not, there's some price floor under which even the
relatively desperate are not going to drive for willingly.

If travel is down, young urbanites aren't taking Ubers to dinner, etc., it's
hard not to see the business decreasing. Uber may not be a luxury for everyone
who uses it, but it is for many.

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whoevercares
Seems it’s Chinese investments are doing great. I wonder if they can comeback
when byte dance IPOs since it absurdly owns many popular apps and might be
next Alibaba level giant

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throwaway082729
Slack's operating loss send easier to recover from. Uber will have to cut
costs massively to come closer to profitability. The drop in stock is before
the lock in period had expired. Expect it to drop further after October when
all the employees dump their stock.

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aeternus
I'd be interested to know how much of those costs are due to driver incentives
and other costs related to expansion into new geographic regions vs. costs for
established regions.

It could be that cutting costs is as simple as slowing down or pausing the
expansion.

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AnimalMuppet
But if they don't continue to expand, are they worth their current value? Does
their value have the expansion already baked in?

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pmart123
Both of your points are likely true. Slack probably could become profitable on
a near-term basis, but that is not what investors are paying for. I believe
Slack is trading around 30x revenue, so the market is expecting continued
growth. At the same time, I believe it also has an eight year burn rate at
current operating losses and cash on hand so it has a lot of time before it
needs to cut expenses. I don't really like how this article fixating on
quarterly operating earnings as a proxy for how the Vision Fund is performing
while ignoring the investment cost basis.

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algaeontoast
I’m just waiting for “The Biggest Loser” Uber memes...

