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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.

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