
Can Uber Ever Deliver? Even After 4Q Cost Cuts, Uber Lost $4.5B in 2017 - Cbasedlifeform
https://www.nakedcapitalism.com/2018/02/can-uber-ever-deliver-part-thirteen-even-4q-cost-cuts-uber-lost-4-5-billion-2017.html
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Animats
_" Uber released new financial data this week, showing full year 2017 GAAP
operating losses of $4.5 billion, and an operating margin of negative 61%."_

Finally, Generally Accepted Accounting Principles numbers from Uber. And
they're awful. Lots of startups whine about having to produce GAAP numbers
(all US public companies have to) because they can't exclude "extraordinary
expenses". But GAAP numbers are real, not "earnings before all the bad stuff"
numbers.

Right now, Softbank is keeping Uber alive. They put in $10 billion at the end
of last year.[1] Softbank is now Uber's largest shareholder.

[1]
[https://www.crunchbase.com/organization/uber/funding_rounds/...](https://www.crunchbase.com/organization/uber/funding_rounds/funding_rounds_list)

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hkmurakami
How much of that $10B was secondary sales that didn't put anything into the
company's coffers?

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zitterbewegung
I think the 10b isn’t sales but it’s to fund whatever insurance policy that
they have on their cars . They probably add that to the price of their rides
or something .

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matte_black
The only thing Uber can ever deliver is people and things to their final
destinations. When Uber shuts down and goes out of business I as a consumer
will just roll into the next service, and will not shed even a single tear for
all who invested in Uber.

Sorry, but thanks for all the cheap rides.

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maxxxxx
Yes, they are a pure commodity.

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MediumD
Sure, but we need commodities and there are tons of profitable commodity
businesses. If Uber is able to deliver ride cheaper than everyone else, they
can make a ton of money, and the logistics and scheduling competencies can be
applied to other verticals. That being said, I'm still pretty bearish on
Uber's longterm success, and their current numbers do look pretty bad.

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maxxxxx
"If Uber is able to deliver ride cheaper than everyone else, they can make a
ton of money,"

They are repeatedly demonstrating that they are not able to do this
profitably.

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MediumD
I am not saying they will or won't be able to do it profitably, but saying
they won't be profitable because their product is a commodity seems wrong.
People need and are willing to paying for commodities, it's a matter of
whether or not Uber can execute.

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maxxxxx
Agreed. It looks like Uber is not Walmart or Amazon who can thrive in low
margin markets though. They are producing huge losses right now.

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RandallBrown
How are Lyft's financials? Are they losing money just as fast or what? If they
aren't, seems like the answer is that yes, Uber can deliver.

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emodendroket
Probably not great, but what if the model of both businesses just isn't
actually viable without massive injections of funds?

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moduspol
Then apparently it is impossible to run a SaaS app connecting drivers and
passengers for a ~25% cut of current prices.

That seems pretty unlikely. We need to move on from this unsupportable "ride
sharing pricing is unsustainable" narrative.

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Jasper_
The expensive part of Uber isn't the SaaS app or even the engineers. It's the
overhead of running a law-avoiding lobbying business that explicitly seeks out
to just do everything as evil as possible.

Hell, Uber tried being a predatory car loan business for quite some time,
which you would think would be one of the easiest ways to make surefire money,
but they lost on that one too: [http://www.businessinsider.com/uber-subprime-
auto-loans-runn...](http://www.businessinsider.com/uber-subprime-auto-loans-
running-it-off-the-road-2017-8)

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moduspol
Even if your claim were supportable, it wouldn't explain how competitors not
"seeking out to just do everything as evil as possible" have competitive
prices.

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Jasper_
There can be an argument that Uber's expensive policy-mongering is enabling
the competition. Lyft doesn't have to do any lobbying, it just has to lie in
its wake while Uber does everything for it pretending to be the nicer company.
As long as Uber is out there wreaking regulation havoc, Lyft is happy to sit
back and let Uber do that. Perhaps Lyft doesn't want Uber to die, since
they're basically the ones spending money to make Lyft viable at all.

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moduspol
Then it's very polite of Lyft to price competitively to allow Uber to stay
relevant when they could easily undercut them, due to their much smaller line
item for "expensive policy-mongering."

This is conspiracy-theory level evidence and rationalizing.

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Havoc
Giving things away at <cost is good for growth and not much else.

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emodendroket
Well, the idea is that they kill off every competing service and then can
raise prices. Also that they can beat everyone else to self-driving cars and
eliminate the cost of labor. Other articles on NC have called the feasibility
of both of those into question.

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EpicEng
Sounds like a terrible idea given that this would just open the door for
another company to do the same to them. They don't produce anything novel
which can't easily be replicated.

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adventured
Once they acquire a dominant position, the cost to assail it will be
astronomical. It already is in fact, which is why Lyft is burning so much cash
just in the US market alone ($3 to $4 billion in red ink just in the US).

You're going to have to convince venture capitalists to put in $10 or $15
billion and be willing to watch it all burn, on the nearly impossible task of
unseating the market winner. That will never happen. That is not how VCs
operate. Which is why Google search has gone almost entirely unchallenged by
VC over the last decade, despite being an extraordinary cash cow.

The reason there isn't another Uber competitor getting $7 billion in VC across
multiple rounds in the US right now, is the same exact reason there won't be
another Uber after the dust settles.

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ashelmire
You are making the incorrect assumption that a company has to try to compete
with Uber everywhere all at once. They don't. Once Uber raises prices to the
point where they make a profit, cabs will just come back and undercut them -
because they will have less expenses (they don't have to support a massive
organization and shareholders). This will happen independently in every city.

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albertgoeswoof
The main value prop for Uber hasn’t changed for quite some time, probably not
much since UberX, the innovation there is pretty much done.

This puts Governments in the perfect position to disrupt Uber, if they build
their own version, feature for feature (let’s face it, it’s a complex app but
not that hard to copy) and mandate it on their already regulated taxis / ban
uber, their user acquisition costs and marketing costs will be almost zero.
They can run it without making a profit and keep fares lower or close to the
current Uber position. Win win for everyone

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ovi256
Did you just earnestly advocate for a government mandated ride-sharing app ?
And you main argument is that if it's government mandated, "user acquisition
costs and marketing costs will be zero", so the users get lower fares ?

That's brilliantly lawfully evil. Why stop there ? That argument applies for
all services. They would all benefit from having zero acquisition costs. Just
nationalise everything. Could anything go wrong ?

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albertgoeswoof
If there’s no innovation, why not? Why give returns to shareholders if their
investments provide no value?

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sgwealti
In the claim in the article that they're inflating top line revenue growth, is
the argument that they're selling a $100 ride but giving a $20 discount and
calling it $100 in top line revenue?

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apike
According to the article they are not only doing what you describe, but if due
to an error or customer service reason they refund the ride later that day,
they still count it as $100 of revenue.

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sgwealti
Couldn't they "double" their revenue by doubling their prices and giving
everyone a 50% discount?

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losteverything
Help me

For every 100,

Driver gets x Uber cut is y X+y = z

Z ÷??? = 100

Where does the 100 go?

