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Uber opens at $42 per share (techcrunch.com)
397 points by kgwgk 39 days ago | hide | past | web | favorite | 437 comments

Some notes from watching Uber open:

- if it closes below $45(its IPO price) it will be the first time since 2008 that the happened for a major IPO

- TD Ameritrade executed more orders in the first 10 minutes of trading than they did for the first 2.5 hours with Lyft.

- Uber is 9% of all trading at TD Ameritrade, retail loves this stock,

- market is down today, which isn't helping Uber but its probably not much of a factor

- Kudos to Citadel, stock opened without a hitch and they seemed to nail the opening price,

- Boo to the underwriters(Morgan Stanley), who seemed to misjudge the market's appetite, important to note that major buyers at IPO, Fidelity and such already had exposure to Uber pre IPO so maybe this staying private longer but selling shares to public fudns had an effect?


- interesting piece on how Uber has grown its market cap in the past few years at the expense of its share price and how that effects later employees.

- later investors like the Saudi Public Investment Fund can’t be happy with the opening.

- from Bloomberg without comment...."Overheard trader on the floor: “That’s what you get when you don’t make a profit. If you don’t make money, people don’t want to buy you.”

- Biggest IPO since Facebook, that's something to be proud of!!


- June 4 is expiration of 25-day quiet period for analysts at underwriting banks. Expect bullish initiations on this date

- Nov. 6 expiration of Uber's IPO lockup. Large selling pressure expected to be asserted on this day as is typical for most IPO's.

Personal thought. It may be tough for employee's to not see this pop to say $65-$70 but in the long run its almost certainly better to open flat than to pull a "lyft" and get a first day pop that you price your options at in your head and to then have to cut that price by 40% before you get a chance to sell.

EDIT for comment below.

> Boo to the underwriters(Morgan Stanley), who seemed to misjudge the market's appetite

Who suffers if the price is quickly adjusted downward by the market? How is that different than it being released at that final market price from the get go? Naively I would think that setting it too high ensures maximum value is captured rather than going to early traders.

The investment bank sells a lot of shares to its own preferred clients. If the price then drops (because the initial offering price was too high) those preferred clients lose money.

So the bank has every incentive to price it low, and usually does. So when the market goes even lower, we know that the IPO was done out of desperation and that early investors who had influence over the IPO price were eager to dump some or all of their positions.

One day is too soon to know for certain that this happened. But if the price is still down a week or two later then it probably did.

> So when the market goes even lower, we know that the IPO was done out of desperation

How is that the correct conclusion. It sounds like the correct conclusion is they still over estimated the market price. Nothing about desperation for or against.

> It sounds like the correct conclusion is they still over estimated the market price

The bank has every incentive not to do that. The bank must juggle the needs of its various constituencies, preferred investors (who provide capital expecting not to have it lose value right away), the firm (which wants to raise capital) and existing investors (who may want to liquidate).

If a bank routinely over-prices IPOs, then preferred investors will stop providing capital. If the bank routinely under-prices IPOs, then firms will choose other banks to underwrite their IPOs.

In addition to the above, the investment bank owns a lot of inventory and strategically buys and sells in order to help keep the price close to the expected price. When this doesn't happen, it might be because the bank couldn't afford to constrain the price movement and had to settle for the bad optics.

This is how the system is supposed to work, but the main reason an IPO would be over-priced (all things considered) is if the existing investors had too much say in the price, since this tarnishes the bank's credibility for future IPOs events.


No, I said it is too soon to tell, and that it has more to do with the balance of power going into the IPO.


They explained it pretty succinctly. Grossly oversimplified: the bank is motivated to accurately price in order to preserve future business from e.g. institutional investors. Overprice and your investors bleed. Substantially underprice and you leave money on the table, less likely to be picked for future offerings. Come close and everyone's generally pretty happy.

I'd be keen to hear why you believe it's "just not right at all."

>If the price then drops (because the initial offering price was too high) those preferred clients lose money.

Unless these preferred clients are active traders, this isnt a problem. Remember when government nixed fiduciary resposibility?

Just slide a soon-to-drop, over-valued-at-IPO stock into say,... someones' retirement account? Wouldnt it be weird if a bunch or Morgan-Stanley-managed 401Ks were shifted to include that?

Especially if the bank managing the IPO gets a cut of the cash, there's no downside to such. At least for them.

If the underwriter has every incentive to lowball the price, why on earth was Morgan Stanly selling its clients ways to short the Lyft IPO?


Here's another theory that they were not [0].

[0] https://www.bloomberg.com/opinion/articles/2019-05-07/lyft-s...

trading isn't an exact science, an early drop looks bad and makes potential buyers more cautious than if it looks like its rallying

> Personal thought. It may be tough for employee's to not see this pop to say $65-$70 but in the long run its almost certainly better to open flat than to pull a "lyft" and get a first day pop that you price your options at in your head and to then have to cut that price by 40% before you get a chance to sell.

The reality is Uber isn't worth $65-70 today given long term risk. As many others have pointed out opex is well over 150% of revenue. Now that could be fine if the long strategy can reel that in over the next decade. I don't see any of that other than a smattering of "bets" (Uber Eats, scooters, etc). I could very well be wrong but I intentionally didn't buy given what all tech IPOs have done lately. As a consumer who doesn't have the option to get in early I'm at the mercy of the large firms who can take profit off large positions which snowball bringing the valuation back to reality. I think we see more of these "backfires" as people are sick of propping up large financials and more caution around waiting for stocks to settle. If Uber employees expected it to pop north of $50 they're going to be waiting a while. There's no reason to buy now, risk is high that a few large trades sinks the stock into mid $30s or lower territory.

Business Insider had a nice graph that put the valuation into context: https://markets.businessinsider.com/news/stocks/uber-technol...

Facebook was at ~$44 on the day it IPOed, and proceeded to fall over the next month to about $19. Today its at $187.

Facebook was also profitable and had about 10x the number of users compared to Uber pre IPO


Uber has paying users. Facebook had advertisement targets.

Doesn't make too much sense to conflate the two.

I think the sensible conclusion here is that the two companies have such different business models and goals that it doesn't make much sense to compare them at all.

Precisely my point. Advertising is a high margin industry with poorly understood issues.

Logistics is a low margin winner-takes-all industry which is fairly well understood.

Famously why we only have a single parcel delivery company, trucking company and warehouse provider.

Love to see your working on how logistics is winner takes all.

Agreed, though I don't think any rideshare company currently is poised to be the winner of their markets, or at least the profitable ones.

this was the smartest thing put in simplest terms on this thread.

wait what?

facebook had paying users AND advertisement targets AND an ability for the paying user to precisely target an ad at the product AND an extremely powerful incentive for the product to not move to competition (product's friend network).

out of the above uber has only paying users - who are ready to jump ship to competition for a penny per mile.

Yes, nuance.

Just saying Facebook had 10x the user as Uber is meaningless.

Yeah, I use whatever is cheapest form taxi whether it is uber, viavan or the tube ;)

Uber doesn't have paying customers, it has customers it pays for.

Am I the only one that feels that Uber has a ton of valuable location data? Aren't rides to a particular location similar to FourSquare checkins? "How many customers are likely to come to your restaurant every Saturday night? How has that changed over time?"

Is that really monetizable?

I feel like Uber's biggest revenue generator would be putting a small smartboard in front of passengers and selling targeted ads.

Data isn't valuable. Using that data to create a product that people will pay for is (e.g. showing an ad to someone en route to the restaurants across the street).

Hah, I guess they'll do that within the next year (the ads thing). Tell drivers they'll earn more if they did that, or the passenger can hit a button on their phonw to turn the thing off for a "premium ride". Just xx cents per ad-free minute!

Or most likely the driver will agree to put the running gadget in the glove compartment for an off-the-app tip.

"Please verify your ride by pointing your camera at the information screen"

"Uber needs to access your microphone to communicate with the information screen"

"I can't communicate with the information screen Dave. It's voice sounds muffled. Have you done something with it?"

But you don't say directly which of the two is more desireable, the market unfortunately looks like it prefers advertising targets.

I think there's been a decade or more or irrational fixation on data-driven advertising at this point.

The market is convinced building these huge treasuries of consumer data, at any expense in cost and creepiness, will result in wildly better advertising performance. We've given Google and Facebook 12-digit valuations on that principle.

But advertising is a 80/80 problem: You can get to 80% of potential results easily, and spend 80% of your money, effort, and goodwill chasing the rest. Content-based ads (think the early era of Google AdSense when the ads would be text or fall back to PSAs) sell pretty well, considering you didn't need an exabyte of profile data to build them.

Eventually, fundamentals have to come into play-- these companies need the revenue numbers to justify the valuation-- and the only way to get there is to charge premium prices for their advertising services. At that point, the music stops, when advertisers realize the cost-per-acquisition is poor compared to much cheaper, more scattershot technology, or even just earlier stops on the targeting continuum.

No, what the market likes is profit.

Arguably, the market seems to like revenue more than profit, at least for young-ish companies.

Uber is more than ten years old...

Wait until drivers can make money by having in-ride advertising screens.

(I kid.)

They already can. I've seen this in 2 cities now. One of the reasons why I prefer Uber/Lyft is to _not_ see the cab ads display.

I've been in an Uber in Boston where this was the case. They had a tablet hanging off the front passenger seat that alternated between trivia questions and ads.

That sounds more like the app they were using had ads built in?

At least Facebook isn't paying for its users. I think that Uber is still losing money on every ride, on average. That might not be the case in a few mature, highly urban markets, but if Uber dropped all unprofitable markets, I doubt their market cap would be what it's at.

I think Uber had better hope that this isn't the relevant comparison. Facebook stayed low for 5 quarters and then was buoyed back into growth by like 33% or so operating margins.

It feels like Uber is a really fucking long way from 33% operating margins.

The Facebook IPO broke the stock market. Literally broke it. They had to stop trading it for a while. That affected the stock.

Facebook has very little overhead compared to uber

Past performance is no guarantee of future results.

> if it closes below $45 it will be the first time since 2008 that the happened for a major IPO

Sorry, first time that what happened?

The first time a listing closes below it's IPO on the first day I believe.

edited the comment,

$45 was the IPO price, meant it will be the fist time since 2008 that a major IPO closed below its IPO price on the first day of trading.

curious: how do you define major here considering that it is the qualification upon which the entire statement stands?

Successful IPOs are successful. A tautology.

Uber is going to rest at $200, i believe

I think Spotify also fell below its IPO opening price as well at the end of the day.

Spotify didn't IPO: they did a direct listing.

It was still an IPO, just an untraditional one.

But to that point there was no "IPO price", i.e. the price paid by institutional clients before the first day of public trading, so there was nothing to fall below (there was a "reference price", but that's just more like the MSRP given by the stock exchange, not what anyone actually paid).

It was not an IPO as there was no public offering. Instead, the company filled an S-1 and was listed on an exchange allowing for secondary trading.

Uber is currently well below it’s IPO price. Historically, that’s not uncommon.

> Historically, that’s not uncommon.

Really? I was under the impression that closing below your IPO price is quite rare indeed. Do you have other data?

Edit: actually, just saw a NYTimes article with info that it is indeed rare:

Since 2000, only 18 companies valued at more than $1 billion and listing on American exchanges have opened below their I.P.O. price. On average, tech stocks have jumped — or “popped,” in Wall Street parlance — 21 percent on their first day of trading over the past 24 years, according to Dealogic.

I would call 18 common, relative to the number of recent IPO’s over 1 Billion dollars. It’s definitely not the majority, but it’s common enough to make leverage extremely risky.

You have an odd definition of "common". That's 18 over a total of nearly 20 years. The billion threshold is for total company valuation, which at least recently is most companies listed, not amount raised.

As of today, 15 of the last 50 IPO’s where down, with one exactly breaking even. I think most people would call 30% common.

2008 has 31 Total IPO’s, restrict that to 1+ billion and you are not talking about a huge list. Restrict that to an unusual few years and it’s easy for an abnormal but meaningless pattern to show up. But, we have no need to make such assumptions.

PS: Facebook is something of an oddity, opening day has technical issues which ended up inflating the price.

> Uber is currently well below it’s IPO price. Historically, that’s not uncommon.

The claim was that Uber might be the first major IPO to close below its IPO price that day.

If its not that uncommon then please show me the other major IPO's that traded below their IPO price on the day they went public.

I'll wait :)

Off the top of my head.

Alstom and CIT Group where both top 20 IPO’s of all time and they fell opening day. Several others where up and down at various points in the day. Which is more my point, being down at some point on opening day is fairly common.

Again, the claim was since 2008 there hasn't been a major IPO to close below its IPO price.

And you site an IPO form the 90's? sigh...

Saying it has not happened in 10 years is not the same as saying it’s uncommon. 1+ billion dollars IPO’s is a tiny sample set and completely arbitrary cutoff points. Go back another 8 years and you can find 18.

That an IPO stock closes below its IPO price on opening day

That the underlying stock price closes below the IPO price.

This reads almost like a sports statistic with how arbitrary it feels.

It’s not arbitrary at all. IPOs are structured by investments banks to ‘pop’ on the first day.

If the closing price is below the IPO that is generally regarded as a failure and may imply over-valuation.

Sounds like when a major college football team schedules a cupcake team for its home opener, and then loses.

During the lock up period, you may feel a slight sting. That's pride fucking with you. Fuck pride. Pride only hurts, it never helps.

> If the closing price is below the IPO that is generally regarded as a failure and may imply over-valuation.

Generally regarded by whom* exactly? The world is full of examples of IPOs that did badly on opening day/week but soared like mad afterwards. These generalizations and pretense of knowledge helps no one; especially considering that "over-valued" is not something that can be determined in a short period of time as value is relative to the context in which the asset presents itself.

* as a non-native English speaker, did I use whom correctly or should it be "who"?

Edit: thank you for the reply mr scarejunba!

It’s considered an over-valuation by investors and anyone who has ever worked in a sellside investment bank or on IPOs.

The goal of the investment bank is to work with the company to come up with a sensible valuation that will clear and pop on the IPO date. The bank has to take into account the market conditions and investor appetite when structuring the trade and setting the price. It is also why you hear of company’s pulling out of IPOs when market conditions are not favourable.

I don’t follow your point exactly, if the value of the asset is relative to the context it presents itself, and the price you set for the IPO is not consistent with the said context, then you are incorrectly valuing the asset. The asset can be under or overvalued.

For the record I have actually worked on IPOs at an investment bank structuring these kind of trades, so it’s not a pretense of knowledge on my part.

> as a non-native English speaker, did I use whom correctly or should it be "who"?

It is correct. Object of the sentence. Common mnemonic: whom answered by him/them, who answered by he/they

> Generally regarded by whom* exactly?

It reflects badly on the investment bank. But doesn't mean anything about the companies fundamentals or where their stock is going to be in a year. Friend of mine bitched that when his company went IPO the bank priced it low and the result was the bank made a fortune and the companies war chest was smaller than it would have been with a higher initial price.

You used whom correctly, but an English speaker wouldn't notice if you used who either.

> June 4 is expiration of 25-day quiet period for analysts at underwriting banks. Expect bullish initiations on this date

Why? There are plenty of examples of equity research analysts pulling no punches on names that the other side of the Chinese wall took public months earlier. And Uber is a classic opportunity for a smart young analyst to get invited on CNBC by throwing some sharply worded shade in their initiating coverage.

PSTG closed below its IPO price in 2015 with $4B market cap. How are you classifying IPOs?

Not sure how they're quantifying "major", but $4B is only 5% the size of uber and I'd guess most people haven't heard of Pure Storage.

Where did you get the TD Ameritrade data from?

Where do you get those TD ameritrade stats?

Facebook (2012) needed strong underwriter support to barely close above opening price.

Facebook's first day of trading was a mess, NASDAQ was crashing and dropping orders all day.

Facebook had a weird first day. They literally broke the stock market software that day.

For your point on TD Ameritrade, they're offering commission rebate first 5 days. Don't believe they offered that for Lyft. They're saying it's because they did not participate in Ubers IPO.

I know very little about shares. How does an IPO close lower on it's first day?

Wouldn't someone have to have bought in at $45 and sold for lower in the same day? Why would anyone do this?

Because they think it will go even lower and want to get out before losing more? Alternatively, they may have got in at a lower price and are still taking a profit.

It's insane how heavy the retail investor scene is right now. Everyone and their grandma is an expert on tech stocks it seems.

It's nothing like the .com boom, CNBC was everywhere. Uber just happens to be really well known by everyone and is thus getting a lot of attention. Your hair dresser isn't likely talking about the Zoom IPO like they would have in 1999.

1998-1999 was sooo crazy. Most stocks kept climbing, high profits dealing with options (calls/puts), almost every week me and my friends celebrated profits. I remember thinking "it cannot be this easy, but it looks like that it is". Then came the big surprise, hehe. Luckily I have always been defensive so I didn't lose a lot of money, but still... .

When your shoeshine person gives you trading tips..

Fixed that for you : when your Uber driver gives you trading tips...

Who still gets their shoes shined?

"JOE KENNEDY, a famous rich guy in his day, exited the stock market in timely fashion after a shoeshine boy gave him some stock tips. He figured that when the shoeshine boys have tips, the market is too popular for its own good."


In case you're not aware, it's in reference to a famous quote by Joe Kennedy, "You know it's time to sell when shoeshine boys give you stock tips. This bull market is over." As the story goes, less than a year before Black Tuesday, a shoeshine boy told him to "...buy Hindenburg."

FWIW I was aware of the the reference and it wasn't lost on me. I was simply reflecting on current state of the shoe shining profession.

Bull markets always draw retail. Smart money needs suckers to hold the bag.


I feel like this point could’ve been made stronger without all the resentment

A certain level of moral dismay is not exactly unwarranted around stuff like this, is it?


Are you arguing that the banks that work on the IPO shouldn't make any money off it?

doesn't matter, made $8,100,000,000 in a day

should really start looking at this from the underwriter and issuer perspective to understand the success story here. Retail buys ticker symbols that have been marketed to them. Everyone else dumps. Company made a ton of money and can do whatever it wants with it, they gain nothing from secondary market trading today. VCs, founders and employees can't sell for another 60-90 days, but founders can give themselves big bonuses (and employees too but I mean.. lets be honest)

That's an interesting definition of "made"... assumes the concept of liquidity has no meaning.

> That's an interesting definition of "made"... assumes the concept of liquidity has no meaning.

Thats interesting definition of "literally traded a bunch of shares to underwriters in exchange for $8,100,000,000 and let the underwriters worry about liquidity on the stock exchanges"

Uber has dollars for the shares they sold. Liquidity is not a concern for the party of the transaction I talked about.

...aaaand, Uber (meaning, the owners of Uber pre-IPO) has less ownership in the business afterwards.

Sure, you can argue that the $8.1B is something "real" that the owners of Uber have more of, afterwards.

But you also have to acknowledge that the business of running Uber is also something "real" that the owners of Uber have less of, afterwards, having traded it in a heavily-scrutinized auction.


If you have $1 and I give you $1, but you now only own half of the total of $2. You did not "make" $1.

If you have an asset and someone pays for that asset with a more liquid asset, then you now have that more liquid asset

In this case Uber Inc exchanged illiquid stock for liquid dollars.

Why the semantical debate? Did the use of the word “make” really bother you? What about when there is dilution like in most funding rounds? Shares of equivalent value are literally made. In this IPO Im not sure if that happened with the sale to the underwriters or not.

This kind of asset exchange is what we are all trying to do, exchange one asset for a more liquid one, dollars. They succeeded in doing that to the tune of 8.1 billion usd. The same us dollars that give access to everything in the global financial system via wire transfer.

"market is down today, which isn't helping Uber but its probably not much of a factor"

It's actually a big factor.

> "market is down today, which isn't helping Uber but its probably not much of a factor"

> It's actually a big factor.

I assume you are trolling but just in case....

the SPY is now up on the day and Uber is still below its IPO price, so I guess we can put to rest the idea that a down market is a big factor in Uber trading below its IPO price.

Market is up today (as of 3:20pm EST). Über and Lyft are down > 6% .

SV Unicorn hype aside, there's not a big moat around running a jitney cab company.

Hmmm. Never heard that term before. I usually hear "gypsy cab".


> Definition of jitney

> 1 : an unlicensed taxicab

Just FYI many people consider “Gypsy” a slur nowadays since it’s commonly used in regards to illegal behaviors (like running outlaw cab services). I understand your intent was not to offend, but this is perhaps why the parent referred to it by a different name. See more on Wikipedia: https://en.m.wikipedia.org/wiki/Names_of_the_Romani_people

There's way too many comments in this thread comparing Uber's non-profitability to Amazon's which I think is quite silly. Amazon lost $2.8 billion over its first 17 quarters while Uber lost $4.5 billion in 2017 alone.

Also comparing Uber to Facebook is quite silly too. Facebook had a lot more users than Uber but they are also different types of users. One is a free user with hope for targeted advertisement (in which the advertiser gains/loses money) whereas the other is paid users/riders (but in this case Uber has been losing money each ride and I don't see it changing). Also advertisement has huge margins with not much cost from Facebook's pov but ride sharing logistics is completely different with very little margin where the driver needs to get paid. Drivers are already complaining that they are not getting paid enough for rides and asking Uber to take lesser cut of the ride. So Uber can't raise their cut over their current 20-25%. Facebook's advertisement business doesn't have this problem. Nor does Amazon as they can make their logistics more efficient.

Amazon is able to lower it's cost with economies of scale but I don't see Uber being able to achieve that as their costs only increase as they scale as they lose money on every ride. The only way I can see them become profitable is if and when they achieve driverless cars, which they are betting huge on, but that's a long way to go. Uber is betting on driverless cars to lower the cost per mile. But I think Tesla will beat them to market much much before them considering Tesla already has the tech. Elon even hinted on the Tesla taxi fleet in the next couple years.

Now I realize Elon's got poor judgement on timing but I still think they will be able to achieve that much earlier than Uber. And if they do, I honestly don't see Uber & Lyft surviving.

Amazon is definitely misleading: they became profitable within specific business areas (e.g. books & music first) but invested that money in new businesses. The analogy would be if, say, Uber was profitable in San Francisco and Los Angeles but still bootstrapping Phoenix and Denver.

I haven’t read anything which suggests they aren’t subsidizing rides in their most established markets just like everywhere else, and both their drivers and customers can switch to competitors so easily that it’s not obvious how they can change that.

I believe they are, by some fairly loose accounting definition (i.e., not counting back office expenses, capital expenses, etc), profitable on non-pool rides in core US cities.

I believe that is considered being "contribution margin positive"

> Also comparing Uber to Facebook is quite silly too. Facebook had a lot more users than Uber but they are also different types of users.

The main difference seems to me that Facebook enjoys a network effect: you can move to a different social network, but who will you find there? While you can download as many taxi service apps as you want and use one or the other, the one that has the cheapest offer. If an Uber competitor comes up with autonomous driving first and offers ride for half of Uber's price, people will switch instantly.

That's a very good point too which I missed. People don't care about whether their friends are using Uber or some other app. They care about whether the ride is cheaper. It's a bottom of the barrel pricing game in ride sharing apps.

They also care about wait times. And drivers care about utilization.

"Taxi apps" definitely have network effects from the two sided market, though not as strong as a social network.

From what I have found personally, the wait times on Uber and Lyft are the exact same in my area in Canada. Every driver which is on Uber is also on Lyft. So I don't think the network effect is helping them much as riders aren't really getting anything different in terms of wait times. Also this is even after Lyft barely being about 1 year old in my city while Uber has been around for many years.

Uber pool gives it a very strong network effect. You need enough riders going in the same direction as you at the same time. When I do my morning commute, I can't take Lyft because there isn't a critical mass and there isn't room for two ride sharing networks. Uber is consistently cheaper and has shorter wait times.

Well said! Given that UBER actually follows a model that looks like: Don't own the equipment, rent people who own their own equipment, be the middleman. It's quite reminiscent of Truck Driving or some sort of specialty guildswork, like carpentry or other professions there are Guilds for. UBER is a replicable model for any guildswork, taxi [guild] service conveniently benefitting from GPS and mapping. However, since UBER owns not the equipment, and only rents the laborers (without a strong "come in to the office" type of contract) it's hard to see where the value of this company actually lies. Of course, due to their brand monopoly, or duopoly, they are able to keep strength for a while. But, eventually, guildsworks in general will probably be delegated to some other motherlode app. If they need help growing or figuring out how to actually make a profitable company, they need to stop thinking about how to be a taxi service, and how to be a transportation provider.

> Also advertisement has huge margins with not much cost from Facebook's pov but ride sharing logistics is completely different with very little margin where the driver needs to get paid

Why is this? In both cases it seems the cost is paying a bunch of servers and engineers to run a website. So why is Facebook seemingly more efficient?

Nope. Market share and pricing power in digital advertising comes from user base and targeting capability. As an advertiser, I can reach most of the population in many country through FB/IG and YouTube. Their targeting data is also pretty good. So they claim a lion's share of the market. Also inventory expands as userbase expands and the userbase doesn't really have other options with similar network effects.

Uber on the other hand has plenty of competition. Their total cost to user has to be competitive vs. not just taxis but possibly owning a car. There's only so much they can charge for a ride and they pay a ton of incentives to get drivers to drive for them in many markets. So the available space for profitability is constrained.

So basically advertising is less constrained on the upside than transportation. The whole bit about 'they have to pay their drivers' is a red herring - the real constraint is that the price the riders are willing to pay is more constrained / lower than what advertisers are per user.

That's part of it. The other part of it is that digital advertising business models turn out to be close to zero cost. There's very little "product cost" when you amortize tech cost over billions of ad impressions - the "cost" really comes from "reduction in addressable market" - ie. what portion of the audience will stop watching the platform due to ads. At least for Google and Facebook, the answer seems to be negligible proportion and in China at least, publishers are finding that many of such people are willing to pay for an ad free experience if you have killer content.

Taxi service is a much more constrained business - you have to pay out product cost plus some incentive to generate supply but you have a strict price ceiling on scaled demand and a lot of competition. The answer for the previous generation of entrepreneurs in this space was to execute regulatory capture and institute a system of restricted supply to boost prices (ie. Medallions, permits etc). So it's going to be interesting to see how these businesses evolve.

Mostly because Uber needs to pay the drivers and they can't really take more than 20-25% cut. Drivers are already complaining that Uber should take less as they are barely making much money especially as there are now a lot of drivers.

Uber also has drivers to pay. Facebook doesn't. Thus, the margin.

Don't you have to adjust Amazon's 2.8 billion for inflation?

Should we though? Technology was far inferior back then and it would be much cheaper for amazon to achieve the same thing as they back in the day if they had today's technology. Amazon also has a lot more gears moving around in their logistics as compared to Uber.

Does Uber even want to encourage people to take more rides if each single one is at a loss? It's hard to envision the strategy going forward.

Yes, they want to eat up the whole market until all the competitors die. Then they can raise prices.

Main competitor here is traditional taxi (can be hailed, paid and tracked through app, has dozens of competing operators, has nice cars). If Uber would raise prices their only appeal would vanish.

If I take an Uber instead of a taxi it’s solely because Uber investors sponsor my ride. The taxi experience is 100% the same thing. I don’t think this is a great business model.

And then new competitors will spring up who can undermine those prices. There is absolutely nothing unique about what Uber does to keep people as customers.

A dominant two-sided market has strong network effects, since new suppliers want to be where the buyers already are and vice versa.

If the drivers are contractors, then they can install both apps.

If they are employees, Uber is thoroughly fucked.

With that strategy, Uber might run out of cash before the competition is crushed.

They are way into debt financing and have a $25B bottom line, this is a "when you owe the bank a million dollars..." situation now, nobody involved is going to let it run out of money and throw the whole house of cards away.

Correct me if I'm wrong, but that sounds like sunk cost fallacy.

I'm not surprised.

> Uber might run out of cash before the competition is crushed.

True, but time scales matter. Given their current position, it might take 20 years for that to happen. By then, who knows where they or the market will be.

Sure but there are quite significant competitors around. Lyft is a major one in the US. But countries like India and China, Uber can't even survive as the competition is beating them to it.

According to this article, stock was valued internally at $49/share in 2016, so anyone joining in the last three years will not have enjoyed any sort of rocket-ship growth.


If you’re joining a $60 billion company with thousands of employees expecting rocket-ship growth, that’s kind of on you, I think. You wouldn’t expect that from a public company; why would you from a similarly sized company that just happens to be pre-IPO?

Amazon in 2016 was $502 a share, it is $1900 now

Microsoft in 2016 was $51, $127 now

Facebook was $97, $189 now

We're not even talking about rocket-ship growth here. We are talking about option strike prices losing money in one of the most favorable economic time periods where massive, healthy public business did have monstrous growth.

I would have at least expected price parity with other large companies - even that assumption would have been wrong.

The Silicon Valley giants don't do options anymore, but RSUs (restricted stock units) which are simply share awards. There's no strike price to worry about, but of course it's a bit of a disappointment if you expected Uber to be a $100B company out of the gate.

Still, Uber employees will be happy that they can finally sell those RSU awards (in six months when the lockup expires).

I can’t speak for sure but that’s a little unlikely. RSUs are taxed on vesting. Bad idea when employees can’t sell a portion of it to pay the tax.

Uber, Airbnb and the rest definitely give RSUs. Details may vary but they may use contracts like “double trigger vesting” where you don’t actually receive the shares until they’re publicly traded.

Expecting price parity with other large companies, okay. But the expectation in 2016 wasn’t for Facebook etc. to be at today’s prices in 2019, or they would have been priced higher then.

Even parity with cash. Investing in tech (say vgt) has had 90% returns over the past three years.

I think the story with Amazon and Facebook are from being over.

That can be a tricky comparison to make over time, due to share splits and merges. Apple has split 4 times, for example.

Taking these numbers at face value, I can't know if they account for it.

Within the timeframe I listed [2016-2018] none of the companies I listed performed a stock split. Neither did Apple. Apple's most recent stock split was 2014.

How much has Google grown in the last three years? Or Facebook? Or Netflix? Or Atlassian? Uber not growing in value in three years, in the hottest economy, is a disaster

I suspect you mean stock price growth only, I think the hype of Uber is now catching up with them.

Uber most definitely grew over the last three years.

It's very reasonable for employees over the past 3 years to expect growth.

Over the past 3 years:

FB is up 60%

AAPL is up 98%

AMZN is up 261%

NFLX is up 363%

GOOG is up 60%

You left off TEAM (Atlassian) up 199% over the past 3 years.

It shouldn't matter a lot since I am 99% sure that they were issuing RSUs at that time and not options. So the strike price based on 3-years ago valuation is not relevant. Also, I am sure the number of RSUs you got at Uber should have been more than the RSUs at FAANG, to compensate for some of the risks. Now, if an individual Uber employee came out ahead, vs. having joined a FAANG really depends on the offers they had.

It matters a ton. You get your rsu grant sized based on the stock price at the time of the grant, just like options. If that price goes up, you make money... Just like options.

It's not just like options though, is the point they were making - if the price goes down, you still make money with RSUs, just not as much.

> anyone joining in the last three years will not have enjoyed any sort of rocket-ship growth

Uber was also somewhat unique among unicorns in uniformly blocking its employees from selling shares on the secondary markets.

I believe most companies do not allow this.

> most companies do not allow this

As someone who does work in the space, no, most companies permit transfers. There are mechanisms in place to reasonably limit them, e.g. rights of first refusal and transfer fees. But Uber was unique in the degree to which they restricted transfers.

That's not unique in any way

We don't know if they did a split before going public or not.

Matt Levine seems pretty confident that the $48.77 price from private transactions is directly comparable to the $45 IPO price, and he knows his stuff, so I think it's safe to assume he's right.


To add insult to injury for Uber's rank and file equity-holding employees: the terms of Uber's stock offers (at least since 2016 if not earlier) say that you cannot sell your shares until one year after they officially vest. That's right, they tack on an additional one-year waiting period for each block of shares awarded. So if you had shares that vested today, e.g., you can't sell those even when the regular six-month lockup period expires... you have to wait until May 2020.

(source: turned down offer in 2016 because of employee-unfriendly terms)

Given this price (and the likely downward trend to come if Lyft is any predictor), I wonder if Uber and Lyft are really just an act of philanthropy from SF VCs + SA to hungry/drunk/tired city-dwelling folk. If so, thanks guys! (* and you mostly are guys). Next ones on me!

It's not the VC's money - it's money from wealthy investors and more recently sovereign funds and even pension funds.

It is never VC money... VCs get paid back few times over. It's our 401Ks that would be automatically funding these IPOs via index funds. So you can say that this is some weird form of socialism enabled by capitalism.

Did I miss something? I thought Uber was still a long way from being profitable and had no plausible plan for how to become profitable.

These days, being profitable is considered harmful. More profits = more taxes. Getting virtual “profits” into stock appreciation and structuring revenues to pay nearly zero tax is the name of the game today, and only big corporations can afford it. It is small and medium businesses that pick the bill.

Don't forget also, it's believed that "being profitable" = "you're done with hypergrowth", at which point the whole band of capital looking for 100x unicorns moves on.

Remaining unprofitable is a part of maintaining the illusion that the company has huge upside in the future.

Yes, I suppose this is also correct. I just wanted to reiterate that with modern creative financing, a large company can stay “unprofitable” basically forever and still keep shareholders happy.

The is only true as long as shareholders believe that the company gets a return on its investments.

If they believe it just destroys the money it keeps, they will start demanding a payout.

Uber isn't rolling profit back into the company like Amazon or others do, they are literally loosing money on every ride. There's no profit to hide from the taxman.

Right. Amazon is and has been accumulating a massive vertically-integrated empire of physical infrastructure they actually own or lease.

Uber is accumulating… uh. Microservices? Negative goodwill?

Markets, it's acquiring markets. I'm no Uber fan, but come on, they're moving into more and more cities world-wide, often without competition save the local taxi firms.

It's achieving temporary local marketshare subsidised by massive losses. The moment Uber charges prices it can actually profit from, its “markets” will vanish.

Except it's not acquiring them so much as renting them, paying each month for the privilege to hold on to the marketshare necessary to also lose money in the next month.

Amazon buys a warehouse and then shortly after turns a profit on it which they use to buy another warehouse. Uber buys users and then shortly after borrows more money to buy other users.

> Uber isn't rolling profit back into the company like Amazon

They kind of are. It’s just a matter of timing. They are rolling future profits, bankrolled by VC.

And betting those profits come in the process. Huge difference.

Same reason I requested $0 salary this year...

Seriously, this argument doesn't make sense to me? How can them spending more money help them make more because of taxes?

Yeah, it's a pretty stupid argument that has somehow become one of those contrarian memes people like to use to appear smart.

I guess it's inspired by Amazon's history of reinvesting, but missing the point that Amazon's motive most certainly was to actually invest into growth.

There are of course many companies that engage in all sorts of morally bankrupt but legal tax optimisation strategies. But Uber is rather different from, say, Apple, in that Uber has absolutely no need for creativity to depress their profit. They are haemorrhaging money the old-fashioned and totally legit way.

It would be better for you to collect stock on a company like google at 0$ salary, and just pay long term capital gains when you sell than salary.

Makes a huge difference long term, as one is filled with payroll taxes and high rates, and the other is 15%.

That doesn't make sense. The stock grant will still be considered normal income to you and taxed as the salary is taxed. Any difference in the stock price after it vests and you sell will be either short term or long term capital gain.

So if you consider getting all salary in cash and then buying GOOG (or any other stock) with it, you come off only a month or two late on the period for which you are holding the stock. And for that, you lose out on the diversity of the stock.

This also assumes that your GOOG stock starts vesting immediately and there is no cliff. Otherwise, you will be holding the stock for "cliff" period longer if you just get cash salary and buy the stock.

Disc: Googler but this comment doesn't have anything specifically to do with Google. Google is just an example here.

Of course, you want all your stock gains to fall under long term capital gain. Google already has the market price in, but all startups don't.

If you make 200k a year for 10 years, vs get no salary for a startup for 10 years and then its sold out for 2 million dollars, they are completely different tax conditions.

Im not an expert or have been through this, but if you sell 2 million dollars at 15% long term rate vs the 35~% + medicare of salary, the difference will be huge.

If you owned enough assets that could be used as a collateral, yes, you could request $1 salary. Many CEOs, Steve Jobs in particular, used to do that. He already had enough cash for day-to-day expenses (like buying a new Mercedes every 6 months); more significant expenses were financed... differently.

You should be already rich and structure your capital properly for this to work.

I get that, as odd as it is. But my understanding was that Uber wasn't doing that at all. I haven't heard of them using slightly dubious accounting tricks to pay more money to shareholders while showing no paper profit. I thought their expenses were simply way ahead of their revenues with no clear way to bridge the gap, and the shareholders are losing money and being diluted too.

It’s not about taxes. If you don’t have a way to reinvest your cash that means you’re out of ideas and are unable to grow.

Amazon didn't turned profit for first 5 years or so after IPO. If you go back 15 years down the history, you will find many articles/analysis doubting if they would ever become profitable. However no one doubted that online retail was the future and brick-and-mortar stores will increasingly become part of the history.

I see a lot of parallels here. No one doubts anymore that app-based cabs are the future and traditional taxis business is pretty much done now. So if you take that as foundation then there has to be one or two companies that would eventually dominate this business. With first mover advantage, Uber has good chance of being one of them.

This is a foolish viewpoint. Amazon got immense economies of scale as they grew, Uber’s costs scale alongside it.

It drives me crazy that so many people equivocate them.

Amazon also built out a huge logistics infrastructure which they own and is hard to replicate (not just know-how, but warehouses and robots). Uber don't own the cars or employ the drivers, they have a phone app and a brand name.

I don't understand why uber's costs don't scale well. They make an app that drivers use. They're not having to buy cars or hire drivers to grow. They just need their app to function. What is all their money going towards?

Is all that money lost just subsidizing the cost of the ride? If they stop subsidizing the drive price, which they will have to at some point I imagine, will people just abandon the service?

There's two ways it goes: squeeze drivers or squeeze riders. The ironic part of their position is as it makes a market on both sides, squeezing either will result in a loss of riders/drivers to alternatives.

This writing has been on the wall for ages, but people keep looking past it.

Uber I think somewhat internally knows this, and have thus tried either moonshots or diversifying. Uber Eats actually looks to be profitable since you take driver surplus and turn it into profits, simplifying a bit. Self driving moonshots are just that - moonshots.

You can already see the effects of them squeezing drivers with recent strikes and issues including a possible 600M+ arbitration costs from drivers.

Good point. Have you read Hubert Horan's articles on Uber (especially those on nakedcapitalism.com)?

Retailers can use economies of scale to lower prices and increase variety of products. There are no economies of scale in Uber the way it's structured now and the service is largely homogeneous. There could be economies of scale with self-driving cars, but why should they be the winner there?

The only way they managed to offer lower prices (which is the main concern to riders) is through VC subsidy. There is simply no way to significantly lower prices for taxis, unless you have self-driving cars.

The only thing Uber has is a limited power of a local network effect which is a relatively weak moat.

Uber is totally banking on driverless cars to lower to cost per mile to near nothing.

I agree that Uber is betting on driverless cars to lower the cost per mile. But I think Tesla will beat them to market much much before them considering Tesla already has the tech. Elon even hinted on the Tesla taxi fleet in the next couple years. Now I realize Elon's got poor judgement on timing but I still think they will be able to achieve that much earlier than Uber. And if they do, I honestly don't see Uber surviving.

There's no evidence that Tesla has any distance on Uber, other than Elon's word which means jack. Waymo is thought to be the leader in this space.

> Elon's word which means jack

He has proved his words countless times now. I have no idea what you are talking about. Only criticism I have about Elon would be his estimations on the time but I work in the tech field too and I can relate to issues coming up which postpone the deadlines.

How exactly is Waymo thought to be the leader? It's like the same argument short sellers have been making for years that Tesla electric cars will be overtaken by other car manufacturers. Come back to me when Waymo has overtaken Tesla in actual and on the market product.

Well, for one thing Waymo's vehicles haven't been involved in any deadly accidents. Tesla's self driving cars are unable to avoid driving into the undersides of trucks. So it's hard to see Tesla as the leader here.

> other than Elon's word which means jack.

I think history has demonstrated that betting against Musk is not a wise choice.

I think you can make the same point without calling it foolish.

> Amazon, the company that everyone loves point to as an example of how losing money eventually makes money, lost a combined $2.8 billion over its first 17 quarters as a public company, significantly less than the $4.5 billion Uber lost in 2017.

Source: https://oversharing.substack.com/p/bird-raises-prices-to-tri...

Was Amazon as big as Uber in those first 17 quarters (in ters of revenue)? If not, it's not an apples-to-apples comparison.

Comparing Uber to Amazon is just silly. Amazon had/has a sustainable, robust business model. They chose to re-invest.

Uber burns money like it's going out if style and has no clear path to profitability.


"Please don't insinuate about astroturfing. It degrades discussion and is usually mistaken. If you're worried, email us and we'll look at the data."


Just like Amazon at its IPO.

Maybe I don't remember it well enough but Amazon's business model seemed a lot more ... tangible than Uber's don't you think?

You don't think selling taxi rides is a tangible business model?

At a loss without any notion of how to make it profitable in the near future? No, I don't.

I see no evidence that they lack a notion of how to make it profitable. Are they doing it in the near future? No, but why do they need to? There are clearly plenty of people happy to fund for the long-term payout.

From what I saw in the S-1, their core platform -- which I assume is ride hailing -- was profitable until Q4 2018. They offer heavy incentives in order to compete, but once they're sufficiently established in a market, looks like they can become profitable on that front by no longer offering promotions in order to fight Lyft/whoever.

They just need to stay solvent longer than the competitors, and being in more markets than the competition should help with that.

Their R&D is also massive, but they could stop most of that if they needed to.

The traditional system did, I don't see Uber doing it.

As a heavy early Amazon and Uber user, I'd say not really. Both are pretty revolutionary and I certainly have been paying Uber a lot more than I was paying Amazon when they just sold books.

I get how Amazon can be seen as revolutionary, but not how Uber (or even Lyft) is. I mean, when I think of catching a taxi back in the day, the only difference is that I made a phonecall instead of using an app to get the service. If it's the "gig economy-ness" of it, we had hacks in my hometown. Maybe there was a license requirement to be a hack, but it always felt like hacks were just regular schmoes who would charge a flat fee to take you somewhere.

I've had very extensive and very negative taxi experiences around the world. Uber is night and day from a UX perspective. Being able to see where the car is when it's on the way, pre-inputting your destination, paying through the app... The gig economy aspect was definitely revolutionary as well. It's essentially changing the nature of work (love it or hate it).

As much as I love Amazon and always have, in the early days it was "just" ordering books online. Yes, that was great and again the UX was great but it didn't seem as revolutionary as Uber.

I don't see how the UX thing is so revolutionary. I live in a city with 120k people, and the app of the local taxi company here does all of those things as well.

But did they do that before Uber?

Not OP, but if they weren't doing it before, and just copied Uber, doesn't that show how weak their moat is? The same could happen with autonomous vehicles as well then.

The topic is revolutionary UX not moats.

Ok, if the UX is revolutionary, then what prevents others from copying it? It still seems like the moat for the UX isn't that great.

That's not been my experience and definitely not before Uber existed and forced people to start copying them.

That's some exemplary public service by Uber, actually. They may actually deserve their status as a non-profit.

Yes you might be paying Uber more, I pay them about $300-$400 a month between our occasional use and my teenage son getting around (still cheaper than a car + insurance), but they lose money on each ride. Amazon has high fixed costs while they were building infrastructure. Uber has negative marginal profits.

Edit: negative marginal costs -> negative marginal profits.

I can't get a clear reading from Uber's most recent financials filing in Feb to determine that they have negative marginal profit. It looks the opposite to me. Given their substantial gross profits, I have to think that they last ride they sell is profitable.

What gross profits?

For FY2018, Uber reported $5.6 billion in gross profits and gross profit margins around 50%.


So they made money as long as you ignore stuff like operating expenses..

That’s the definition of gross profit. Within operating expenses, advertising is close to a cost of profits in a way that R&D isn’t.

It’s why we use multiple metrics to evaluate a business, but it’s clear that Uber has large positive gross margins.

When it comes down to it. The only thing that makes a company viable is whether they are making more money than they are spending.

Ignoring all other expenses and saying that a company is a good business is ignoring reality.

I’m not just choosing a method that makes Uber look bad. They are not profitable or successful based on a legal GAAP definition of profitable.

If we just cherry pick numbers, we might as well think that WeWork’s made up metric of “community adjusted EBITDA” is valid.


Selling a $20 bill for $18 is unsustainable. Selling a $20 bill for $40 and having $15 of advertising expenses and $15 of R&D expense might be sustainable. I think Uber is comically overvalued here, but still is a viable business which is profitable in its core operation.

Marginal profit, rather. Negative marginal costs would be pretty sweet.

In the 1997, Amazon's proposition of "Online retailer" was also pretty far fetched. It wasn't obvious that their model was going to make them one of the largest retailers in the world.

Online retailers wasn't far-fetched at all. It wasn't obvious they were going to become the everything store and dominate the market, but it wasn't like people were perplexed by a business plan of selling books online and sending them to consumers.

If people are perplexed by uber today it's because the unit economics look horrible, and it doesn't seem like they will improve without a major technological advance.

Edit: TBF, I was curious so I checked out AMZN's first year of trading: https://finance.yahoo.com/quote/AMZN/history?period1=8528832...

They dropped 20% on day one. I don't think that reflects investor skepticism re: shopping online, but skepticism re: the myriad risks they faced as one of many money losing online retailers.

Even with a major technical advance it's not obvious that they'll have a moat to defend their margins. All of the ride sharing platforms might just end up competing to the death on price without anything else to differentiate on, and in that future I'd imagine the person with the cheapest supply chain will win, and I don't see why that would be Uber.

It wasn't farfetched, everyone had the same idea, there were dozens of online retailers that IPO'd in those years. Amazon was just better managed so it was one of the few that survived the dotcom crash.

They also started with selling media, which is the perfect industry to get people comfortable with shopping online as quality is nearly assured.

Right. At the time, I thought Sears would dominate that business. They had the big-catalog fulfillment thing down, and had for a century. All they needed to do was take it online. But Sears gave up on general mail order in 1993, when they discontinued their huge print catalog. They thought WalMart and the malls had won.

I duno, buying stuff online seemed like the way of the future at the time IMO. When, how much and etc was just a matter of timing.

The idea of "people won't buy things they can't judge by holding it in their hands" was still strong back then. That's why Amazon was successful selling books where quality was trusted implicitly without that physical judgment being necessary.

TechCrunch did a good job looking back at Amazon's IPO and it's a good read to clarify what Amazon was when it went public (a bookseller, not general retail), how insane its growth was (revenue up about 3,000% YoY from 1996 to 1997, more revenue in the quarter before its IPO than the entire previous year), and how fast the IPO came together (12 days to S-1). Even for all that growth, revenue was still around $15M. It was a minnow but it played all of its cards about as right as it could for an IPO.


Doesn't ride sharing seem like the way of the future in your opinion?

Who's doing ride sharing? Certainly not Uber

> Uber Technologies Inc. is a transportation network company (TNC) offering services that include peer-to-peer ridesharing, ride service hailing, food delivery, and a bicycle-sharing system.


Not necessarily.

So is gig economy. Jobs will continue to decline.

My feeling though is that Amazon had a much larger moat to build, with distribution networks, warehouses, logistics etc.

With Uber, what's their moat, so that when they raise prices to become profitable users don't just move away?

Lyft/local taxi companies/public transport, all have the infrastructure to provide the service that uber provides.

Lyft has to be in business till then. Local taxi companies are more expensive than Uber and inconvenient. Public transport is barely used. Uber is providing a subsidized public service while employing a lot of people.

The moat is there but the question is one of diversification and sustenance as a public company. In the coming days, there'll be a massive internal push to reduce costs, diversify and become profitable. If the foundation of the company is strong, they'll be able to get through this period. Instead, if most of the early employees jump ship (which I strongly suspect is likely to happen), it's going to meander. For Uber's own sake, having a mature and repentant Travis back might not be a bad thing. They'll need a second wind at some point.

> Local taxi companies are more expensive than Uber and inconvenient

Uber essentially sets money on fire in order to make the rides cheaper than alternatives, but that will eventually end. I've got some bad news for you about what happens to prices when that occurs.

Of course that is the ultimate goal of Uber, and all ride sharing systems: to destroy any and all local public transit and competitors, no matter the cost, by setting obscene amounts of money on fire and then, when it's all said and done, they get to be the only name in town and price however high they want.

(Side note, but it's going to be legitimately hilarious when Uber re-introduces the concept of "buses" and tech nerds here drop their jaws in disbelief at how amazing it is.)

> Public transport is barely used.

I've got some bad news about places outside of the US (and even many places inside the US).

> Uber is providing a subsidized public service while employing a lot of people.

No they don't; they actually do not do either of those things. Uber isn't a "public service", by definition, that is, unless words simply don't mean anything anymore. It's a business designed to make money; the fact that you confuse these two proves Uber's marketing is working on you, not that it's actually true in any meaningful way.

They also don't actually "employ" any of their drivers, the largest part of their "work force", and they have argued that position in court as well in order to avoid paying benefits, etc for their drivers. And of course, their inevitable goal is to just move to autonomous cars as far as possible, meaning those "employees" (who aren't actually legally defined as such) will eventually get kicked out of the whole system, if they can get there. Of course, once that happens, the tune will go from "uber employs a lot of people, and therefore they're good" to "why did you ever expect uber would keep employing you? just get another job" over night, without a hint of self-reflection at all.

> (Side note, but it's going to be legitimately hilarious when Uber re-introduces the concept of "buses" and tech nerds here drop their jaws in disbelief at how amazing it is.)

Lyft already did: http://nymag.com/intelligencer/2017/06/lyft-reinvents-the-bu...

> Uber isn't a "public service", by definition, that is, unless words simply don't mean anything anymore. It's a business designed to make money; the fact that you confuse these two proves Uber's marketing is working on you, not that it's actually true in any meaningful way.

Is Delta Airlines "public transportation"?

Local taxis are perhaps only more expensive due to Uber burning VC cash to compete?

Public transport is barely used in the USA perhaps but that's not the only market Uber needs to compete in to succeed.

And this isn't taking into account Uber's many run-ins with local authorities, which are dragging on , costing money and have the possibility to shut them out of some markets.

From what I understand Uber's main answer to this is "autonomous taxis" but to me that's a long way from being a viable business model.

Here in Melbourne Australia, Uber has caused the government to deregulate the car hire/taxi business. So the cost of entry for car hire is identical for an Uber driver or other limo/car hire services. It's the cost of the car, the cost of the driver, and the cost of access to bookings.

For street hail, the cost is higher because the government sets regulation about the equipment (eg compulsory CCTV, meters etc).

The net result is that the cost of an Uber ride is almost identical to a street hire, identical to using one of the other apps that are around (13 cabs, Ola etc).

Uber has a name/brand advantage, but it has lost the cost advantage over the old taxi model and it has lost the app advantage as the app is easily replaceable.

Many drivers operate on more than one app and street hail cabs (the "original" taxis) operate on both.

Uber's business model for their core business is unsustainable, the margins and operating costs are identical to other operators, there is no advantage of scale.

> Public transport is barely used.

In one of Uber's largest markets, NYC, public transport is extensively used, and I assume that many price-sensitive Uber users will go back to taking the subway or bus if Uber raises its fares too much.

Andy Byford is one of the most dangerous people in Uber's world.

Luckily for them: Cuomo and De Blasio have a running bet going to see who can bugger it up more completely.

Oh lyft will be in business until then. How do you think Google is planning on selling their Waymo rides?

I would personally pay twice the rate I pay for an Uber to be honest.

Amazon was cashflow positive from the early days and raised less than $100m in its entire existence.

To be fair, AMZN was valued at $400mn at the IPO and not $80bn (only in 2011 did Amazon reach that valuation).

Amazon went public in 1997 with revenue of $16M in Q1 of that year. Its revenue was up a startling 1,800% or so YoY. Its losses were about $3M, so about 19% of revenue. Its market value at launch was about $438M, about 27x quarterly revenue.

Uber's Q4 2018 revenue was about $3B, up about 25% YoY. Its losses are a little hard to parse due to some tax shenanigans, but maybe $865M is about right (or maybe it should be worse), so 28% of revenue. Its market cap right now is around $85B, about 28x quarterly revenue.

Amazon was cash flow positive within few years (6?). Uber still isn't

Can you elaborate?

Amazon stock success has always been built on AWS.

It went from $18 to $106 in 1997-1999 and it was not due to AWS.

Amazon was a public company for almost 10 years before AWS was a product.

Uber is valued more for its potential and growth. Uber is optimizing growth and revenue before it optimizes profit (which could take another decade). See Amazon.

"optimizing growth and revenue" by subsidizing the operations. That isn't "optimization", it's sunk cost that will never be recovered.

Uber is already withdrawing from Asian cities (eg Bangkok) where the price of taxis was close to cost, and in other cities (eg Melbourne), where Uber's flouting of the existing law has lead to deregulation, Uber is just another brand in the market. The price of a normal taxi hailed on the street and an Uber (I took Uber to/taxi from the city the other day, non peak, non surge) was literally within 5%.

Uber's business plan under Kalanick was to create a monopoly and then raise rates. Now that Dara is CEO they're trying to legitimize themself, but it's going to be an uphill battle to say the least.

Uber's business plan under Kalanick was to flout the law and use VC money to subsidize until some future time when it would be a monopoly.

It assumed that the market would not react or it assumed that the VCs would keep funneling cash to keep it going.

Uber's business "model" always was unsustainable and the IPO and subsequent drop is entirely realistic as people realize that.

Uber Eats and some airy-fairy driverless vehicle models will not sustain it.

Currently Uber does not fund its vehicles, how does it think that the capital cost of running a driverless taxi fleet in a city will somehow be cheaper than the current cost of driver+car?

Uber doesn't have the capital to actually replace its current business model with one that is capital intensive and it will be eaten alive by existing fleet logistics and car manufacturers. It has no distinct advantage when operating a driverless fleet than Fedex or UPS or the equivalent operators.

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