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Uber Posts $5.2B Loss and Slowest Ever Growth Rate (nytimes.com)
425 points by jumelles 41 days ago | hide | past | web | favorite | 501 comments



No doubt they are struggling to show a path to profitability, but $3.9B of that is a one-time recognition of all their stock comp which makes look much worse than it should (Assuming that a 1.3B loss is more "normal")


I am confused at how that 3.9B could be said not to matter - I'm not familiar with what precisely "recognition of stock comp" means, but I'm going to assume it was either squaring a previously deferred liability - or directly needing to pay out some sort of stock based compensation.

Assuming the compensation was for a business need (like hiring labour or purchasing something necessary) then I don't see how that should be isolated or differentiated from regular costs of running the business - assuming it wasn't a business need (and was more of a way to game the stock price) then I'd assume whoever made the decision to take such an action when Uber is already losing money hand-over-fist is just trying to get out some loot while they can... which is potentially an even more extremely bad scenario to accept.


You can break that question into 2 parts.

First, the 3.9B figure appears to represents all RSUs vested up to this point, aka many years worth ("(2) Q2 2019 includes $3.9 billion of stock-based compensation expenses, primarily due to RSU expense recognition in connection with our initial public offering"). That's why its slightly misleading - its many years worth of stock comp for employees which is all getting recognized this quarter (Happens in pretty much all the big tech IPOs)

In general though, its very reasonable to associate that as an expense, which is why GAAP requires it. Where that gets complicated is that its not an immediate cash expense to the company, hence some fudging around with non-GAAP accounting which is seen by some companies.


Ah thank you - yea it might not be directly coming out of the company as a cash expense but it certainly is depreciating the value of the company and considering that stock options of various types are often offered to supplement salaries (and let's just understand that nobody gives up money for free, so were these options not available they'd be paying higher labour costs) then it is logically an expense to the company by way of dilution to actually carry out their disbursement.

I am pretty personally wary of stock based compensation in non-publicly traded companies since it's a gamble that the employee is accepting that is entirely controlled by the company - bad business decisions can cut your compensation through no fault of your own if the company goes bankrupt.


Stock based compensation doesn't affect cash flow. It's newly issued stock granted to employees.

I'm not sure when the accounting laws changed to include SBC (probably post-financial crisis), but it's weird to include it in an income statement as if it was a cash expense. You can find articles from accounting experts arguing both ways if you are curious.

e.g. http://aswathdamodaran.blogspot.com/2014/02/stock-based-empl...


People disagree on this. Warren Buffet for example famously argues that SBC is a real expense even if non-cash, just like depreciation.

More to the OPs point, I'm guessing Uber had FB-style RSUs that don't settle until an IPO or Change of Control. I'm not sure how this all gets accounted for, but given the recent IPO, it sounds like they booked a very large SBC charge this quarter to account for the immediate hit of all the previously issued RSUs finally being settled.

Going forward, the number of RSUs that settle each quarter would therefore presumably not be nearly as large.

But I'm not an accountant so the above may be wrong.


> People disagree on this. Warren Buffet for example famously argues that SBC is a real expense even if non-cash, just like depreciation.

There isn't much to disagree about. It's a real cost against shareholders (that's what Buffett is talking about) and it is not an expense against the business operations such that it depletes your cash or harms cash flow (the point a parent comment was making).

Putting it broadly, stock compensation is primarily a hit against existing shareholder ownership. It debases their ownership of present or future profits.

Uber could simultaneously produce $5 billion in positive cash flow from operations and issue $20 billion in stock every year to employees. They'd have a profitable business at the operational level and be drowning shareholders in dilution.


> it is not an expense against the business operations

Except it is, you're borrowing money from the future if your company would ever consider issuing more stock in a followup round - it also may damage your ability to court private investors, not just because you lowered your share price but because you're more likely to dilute it more in the future.

The stock market is a generally viewed today as an absurd concept composed of abstract financial wizardry - but it is grounded in the concept of partial ownership in a company and the assets of that company.


Income statements show multiple non-cash expenses. There is a reason why both the income statement and the statement of cash flows exist. Stock-based compensation is included as an expense since 2004 (before it was optional to do so, so unsurprisingly companies relegated that disclosure to footnotes).


Not an accountant and didn't really like my accounting courses very much :-)

But mostly post dot-bomb. It's one of the reasons you see a lot of RSUs at bigger companies today rather than traditional options. FAS 123(r) was the first major rule. This came about because companies basically were treating stock options like they were free money from an accounting perspective.


It doesn’t affect cash flow but it does affect earnings.

One time loss is fine to ignore, but one should still look at the remaining 1.3 billion loss including routine stock based compensation.


From their S-1:

>We incurred operating losses of $4.0 billion and $3.0 billion in the years ended December 31, 2017 and 2018, and as of December 31, 2018, we had an accumulated deficit of $7.9 billion.

Now they have accumulated a deficit of $13.1B. You might say, well they shrank their loss from $4B to 3B to $1.3B (giving you the extra $3.9B one-time stock comp). Except one has to keep in mind they cut expenses and raised fees in that stretch in anticipation of their IPO, so its literally the best they could do...only lose $13.1B over 3 years.

Investors and Founders made their money, Uber is now for the plebs to figure out how to salvage and milk. It will just be a long and painful death from hereon out, but the market will remain irrational to allow Investors to save face so they can run the same Startup/IPO unicorn scam on the public to cash out.

However, instead of the long painful death, an alternative now that the Investors are out, we may see the regulators finally "catch up" and properly classify Uber drivers as employees not independent contracts and the bottom give out.


$4B and $3B is for the whole years of 2017 and 2018. $1.3B is just for this quarter.


I don't know how the headline could be anymore objective than this. And the loss numbers not withstanding, a company bleeding money like a unicorn growing only 14% in revenue is pretty bad no matter how you slice it.


Remember that article yesterday about the company that resold movie tickets at a loss to gain market share? That's Uber's business model.

(Self driving cars were never going to save them. Not only do they not work yet, there's no reason to think they'd be much cheaper for years to come. Uber would have to pay for them, garage them, maintain them, operate control centers, etc. They'd be in the car rental business, which is not hugely profitable. Uber's business model is to dump their operating costs on their drivers. With self driving cars, they couldn't do that.)


I never understood why people thought self driving cars would lift Uber out of their miseries. Even if they do make it more profitable (although it's not as trivial as you mention), they would also be in a much more competitive landscape compared to the duopoly situation they have now. The costs might go down, but it doesn't mean they would be able to maintain their market share.


Interesting stock chart: https://finance.yahoo.com/quote/UBER?p=UBER - set it to 5 days.

Apparently Lyft upped its guidance, and Uber stock took off today; it was up 8.25% percent from yesterday. As of right now, it's now down 10% off closing to 38.66, a value it hasn't had since... last Wednesday morning.

Disappointing if you're a holder, sure, but not as catastrophic as you'd think if you only read this news.

(To the extent I have bias here, it is bias against trying to judge stock performance only by reading about its massive jumps up or down. Uber I'm not a particular fan of but I can't say I'm all that personally passionately against it either. I don't mean this as attack or defense, only a perspective on the news that I think is closer to a truth.)


I only like uber/lyft for one very important reason. Drinking. I truly believe its saved a ton of lives thanks to its ease of use. I'm in college right now, and I couldn't even imagine trying to get home without lyft or uber in many circumstances. Its made it so convenient to get a ride at any time, anywhere, that nobody even thinks about driving home anymore. Public transport simply isnt an option at 2am where I live, and the area is not very dense either.


Evidence is mixed: https://www.nytimes.com/2017/04/07/business/uber-drunk-drivi...

Most people who drive drunk aren't doing it because they're desperate and have no other option, they're doing it because they're drunk assholes. They will still do it even when they could get a Lyft for $8. They're drunk.

> I couldn't even imagine trying to get home without lyft or uber in many circumstances.

Ok, but people must have managed it somehow 10 years ago, right? Your college and your city have not changed very much in that time. It truly is not that hard to take turns with your friends staying sober once in a while, or just stay over at a friend's place and then leave in the morning.


I agree with you on the drunk driving part, but it just makes a lot of situations way easier. A group of 4 friends can go out without having a car, have fun, and not have any anxiety about how they are gonna get home at the end of the night.

My college and the city actually has changed a lot in the past 10 years, it's seen acceptance rates go down 20%, 2 deaths in Greek life, tuition rise by $10,000, and major companies move into the area. My school also has developed a parking shortage, so many students living on campus are not allowed to bring cars. Uber/Lyft is a godsend for many students.


I agree that it makes things easier for people who use it. I used it a lot in college because my school basically told us that if we walked more than 3 blocks outside campus we would get shot.

My point is that it's a marginal improvement, and there are so many downsides. In my city, 8% of cars on the road are Ubers and Lyfts, and half of them are just drivers cruising around looking for passengers. [1] That's terrible for traffic, terrible for the environment, and terrible for anyone who wants to bike through a square without a clueless Uber swerving into them to drop someone off.

Also, the backstop of Uber makes it much less likely for people to push for real sustainable public transport. In 5 years, when Uber is dead or so expensive that most people won't use it regularly, we're going to look around and wonder why the buses and trains seem to have stagnated for 15 years. It's a tough sell to shut down a few streets to expand a subway line right now when that disrupts all this essential Uber traffic.

Finally, think about the opportunity cost. The hundreds of billions of dollars that could have gone to real infrastructure [2], or startups that aren't going to fire all of their definitely-not-employees in a couple years.

[1] https://drive.google.com/file/d/1FIUskVkj9lsAnWJQ6kLhAhNoVLj..., https://www.citylab.com/transportation/2019/08/uber-lyft-tra...

[2] https://twitter.com/i/web/status/1157456628532170752


I agree. You bring up some great points.

It's kind of ironic, at my school we have a great (all electric!) bus system transporting people around campus, and half the time when the bus pulls up to the cutlet, there's an uber there either waiting or dropping off a passenger. Which then slows down the bus while it honks at the clueless driver who doesn't even know there's a bus stop there.


I strongly believe Uber is going to shut down their self driving car unit at some point. May be in a year or two. There is no reason to keep that running when the end is not in sight for SDCs. That is not going to happen at the level Uber wants any time soon. If not today, very soon, Uber is going to accept it and dump their unit.


Or they could do what Tesla does and continually pump out press releases to prop up their stock price.


It seems unfathomable the rate at which some of these companies lose money. When I think of asking an investor for money, I imagine having a to put together a pretty foolproof plan of action to get a return. How do companies like Uber, Tesla, or even Amazon early on convince investors to lose money year after year? Investors have never struck me as the patient type.


They call it "Tilt" in poker, you have a losing hand or two and start throwing money to try and recoup your losses.


I get your sentiments, but to me, it's like going on Tilt with someone else's money while they watch.


The theory is Uber / Tesla / Amazon will turn into global near monopolies and be worth loads of money down the line. Which kind of happened with Amazon. Most investors invest over a life time. They just don't trust startup idea X will turn into Microsoft which is why they are looking for a good plan to get a payback.


It was easy to apply for a personal loan with WESTERN LOAN FINANCE and they were quick to respond. They made the process seamless and were very helpful. I am happy I chose them. I would highly recommend.


Reading https://investor.uber.com/news-events/news/press-release-det...:

  1,740 Cost of revenue
    864 Operations and support
    638 General and administrative
  _____+
  3,242
That’s higher than revenue (3,166), so even ignoring R&D (3,064), Marketing and Sales (1,222), Interests (151), and a few other expenses, they aren’t making money.

Also: what’s in “Cost of revenue”? It is neither “Operations and Support” nor “General and Administrative”. The subsidies they give drivers? If it is, prices would have to go up by about 50% for that to go to zero.


Fully self-driving cars hit a wall (no pun intended), and that was their only story for eventual profitability. Not surprising.


IMO, the idea that fully self-driving cars are anywhere close to being created was always just a combination of hype and wildly irrational underestimation of how hard it is to create them. The challenge of building a road-safe fully self-driving car is not far from the challenge of building artificial general intelligence. I think that road-ready fully self-driving cars are many decades away, and they may never actually be created.

What really surprises me is how many otherwise savvy and tech-knowledgeable people bought into the hype.

That said, I also think that not everyone involved in spreading the hype does it for innocent reasons. For example, people often criticize Elon Musk for making absurd claims about self-driving cars, but then argue that he does it because he is innocently deluded. I suspect it's more likely that he is lying through his teeth.


IMO, it was a combination of (to be relatively generous):

1. General AI optimism fueled by the almost incredibly fast rate of advance of progress enabled by supervised learning in certain domains and by reinforcement learning in an even narrower set of domains.

2. Adding to the above, progress enabled by super-precise mapping within constrained areas.

3. Probably some California-centrism. What's this weather thing of which you speak?

4. Silicon Valley techno-optimism that problems just need one more version to solve

but

5. A great big game of topper in which, once various people started proclaiming that self-driving was just around the corner for whatever combination of over-optimism and because it was in their financial interest to do so, YOU had to fall in line or you'd be perceived as being hopelessly behind your competitors when you said self-driving was decades out.

Further fueled by

6. The many young professional urbanites with no current interest in owning a car or even getting a driver's license who so desperately wanted to believe that their personal robotic chauffeur that they believed things that they never would have were they not otherwise so personally invested.


It happened because the first 95% is tractable. Waymo probably got that far. But there's this infinitely-long tail of edge cases, and 95% isn't good enough when it's literally a matter of life-and-death.


FWIW, I don’t think self driving cars would have made them a good business. Once you no longer need drivers, all you’re doing is deploying a fleet of automobiles. We already have companies that do this: taxi services and auto rental companies. They’re shitty, low margin businesses with tons of competition. The promise of Uber was being a monopoly because they were first mover on a market with network effects. Much like eBay. But self driving cars remove the network effect inherent in needing to attract both drivers and riders.


You aren't going to rent a car to take a fifteen minute trip across town, so that isn't really comparable. And yes, they would be a taxi service. But they would be a taxi service with lower costs since they don't need pay for a driver.


Right, but they wouldn't have a monopoly on being a taxi service. And literally every other business where you're managing a fleet of equipment is not a particularly special business. Why would Uber be any different?


Until the other taxi services have an autonomous fleet. Uber never had a unique position here. Not too mention these cars are not just around the corner.


you would if it drove itself.


They already have an app for hailing cars, viewing their status on a map, etc. which tons of people already have on their phones, as well as an extremely recognizable brand and lots of data-center investment to back it all. Competitors would pop up, but don't underestimate the value of those things.


FWIW, they don’t control the default map apps for the two major phone platforms. Competitors will be desperate to fork over money to Apple or Google to get placement when people are planning routes. And Apple and Google may also be in the ride sharing game at that point, since they’re both currently working on self driving cars.


I'm pretty positive that is Google's end goal. They even had (have?) and integration with Lyft/Uber at one point so that you could hail a ride from within the Google Maps app. My bet is that it was meant to be a proof-of-concept to see how hard it would be just to replace them with their own service.


Yeah, Apple has this feature, too.


>... in needing to attract both drivers and riders.

The are not trying to attract drivers at all, they are trying to eliminate them. The drivers portion of the fair is the largest cost so removing drivers increases margins overall. Self driving cars are the only way this is a good business - which is why there is so much competition from many of the smartest innovators/investors in the world.


Is it just me or is 12% growth in adjusted revenue very mediocre for a company taking a loss and trading at Uber’s revenue multiple?


It makes no financial sense. You can't even talk about what the P/E multiple should be for that growth rate because you can't guess what their earnings will be. As many others have posted they are not close to breaking even so it is hard to conclude what changes they would have to make to earn $1 in operations. (I know they have had a profit in a qtr. I am taking operating profit.)


Yeah I mean at their growth rate they would need like 100% profitability to justify the current market cap.

The P/S multiple is what you’d expect the P/E multiple to be.


Stupid question: but how is this the case? The fare I pay for an Uber or Lyft seems much higher than the time/car/insurance cost of driving myself ($30-$50 for a 25 min ride to SFO). But the drivers don’t get much of that fare, so I assumed the bulk of the money went to Uber/Lyft. But they’re badly in the red... so where is the money going? I’m missing something here.


> But the drivers don’t get much of that fare, so I assumed the bulk of the money went to Uber/Lyft.

Ridestar claims that 61% goes to the driver; 39% to Lyft/Uber.[0]

Their S-1[1] shows lots of sales and marketing, lots of R&D (remember, they're working on self-driving cars, among other things), and lots of general/admin (I suspect they spend a lot on legal).

[0] https://www.ridester.com/uber-fees/

[1] https://www.sec.gov/Archives/edgar/data/1543151/000119312519...


Besides the R&D, they hired an army of SV software engineers at top-of-market rate.


The drivers do get most of the fare--but, properly accounting for costs, a lot of that slice "goes to" their cost of operating the car for the ride.


drivers get a little more than just half of the fare, uber keeps more than 1/3


Oof. This doesn't look good no matter how you shake it. I wonder how long the investors go on before saying "enough is enough."

I don't have a horse in this race, but if Uber/Lyft fail there are going to be substantial societal repercussions. Admit it or not, they have disrupted the transportation industry significantly.


The one who fails later could get the market share and monopolistic power. The void will be filled as soon as it gets created. That is how the market economy normally works.


Well, that explains why my daily commute has gone up in the last few weeks. If they'd let me buy a ride pass, that'd at least make me use them. Instead, Lyft gets my business.

Just as a note: without a low-cost private car, I literally could not keep my job.


Can't help but feel schadenfreude after a rather nasty interviewing experience at Uber earlier this year. In the eyes of their recruiter, preferring competing offers that are > $100k higher than Uber's makes you a despicable person who only cares about money, apparently. Coming from a nonprofit I would have felt bad for a second but Uber? Come on.


The most ridiculous thing in Sydney is all the Uber drivers drive for Uber, Bolt and Ola. The same car, the same driver but the only difference is a which button I push on my phone.

So whoever gives me a discount I will use and if no one will I will catch a bus or taxi. Google Maps shows me the estimated cost for Uber and Bolt.


I wouldn't say it's really that ridiculous, not any more than different grocery chains carrying the same products. I think this is exactly what gig economy, and in general market capitalism, should be like -- pushing the price down through competition for the benefit of the consumer.


The consumer in these apps is the driver. They are emphatic on that


I wish more companies did that, effectively trickling down the VC and investor money down to their employees, and preferably the gig workers. We should be encouraging more companies to adopt the Uber model, except we should insist on that gig worker compensation.


The biggest issue with Uber for me is pricing. I like to pay a fair price. Uber uses AI, therefore, you don't pay a fair price. I don't feel like researching options every time I need a ride. Many tech companies hope for lazy consumers, who sign up for food deliveries and don't notice 5c price hike on eggs. Who get used to ride sharing service and fail to ever verify that uber/lyft still offers competitive pricing.

I don't want to work around it. Therefore, I rarely use these services. It is becoming more and more hassle.


I'm assuming by AI you mean adjusting the prices based on supply and demand? What do you suggest as an alternative? If prices don't adjust accordingly, you simply won't be able to get a ride.


No. I have no issues with supply and demand based pricing. The issue for me is that two different people may get different pricing for the same trip only because AI found a certain customer can/will pay more.


"Uber uses AI, therefore, you don't pay a fair price."

Do you understand how many other industries use AI for pricing? What about buying things on Amazon? Hotels? Airline tickets? Gas?

You may as well go back to using taxis if you don't think Uber is giving you a fair price.


Wait you are telling me gas stations use an AI algorithm that sets different pricing for each individual because that is what I dislike.

I'm okay with airlines, amazon or whoever setting pricing at whatever they want as long as all users pay the same amount for the same thing.


Uber laying off 400 two weeks ago felt like a leading indicator that they were going to deliver a weak quarter, I'm surprised this wasn't priced into the stock (which is now down ~10% after hours after finishing today's session at +8%). What was the market expecting?

(1) https://www.nytimes.com/2019/07/29/technology/uber-job-cuts....


The same thing it was expecting from Beyond: world domination.

(kidding)


The recent realization by cities that these services are making traffic worse will induce more regulation which will make these services even less viable than they already are.


As rides get more expensive or as these companies run lower on cash to burn; I suspect we'll eventually get back to the traffic reduction use case; an easy way to make a buck driving a route you're otherwise already taking or just a few miles from your house.


I'm not sure that actual ride-sharing like that can out-compete public transit, from the point of the view of the customer.


I heard on the news yesterday that 13% of all traffic in San Francisco is ride sharing vehicles, and that at any given time there are approximately 5700 ridesharing vehicles cruising around the city. Pretty stunning if you think about it.


It used to be a huge portion of SF traffic was people circling around looking for parking. The ride-share traffic is an improvement.


More cars equals more pressure to improve transit and introduce congestion taxes, two things that Uber et. al. are fighting against.

It may as well be trying to hold back the sea. They can do this in the short-term, but not forever.


Both companies are in favor of congestion pricing [1]. It reduces the incentives to drive private vehicles into the area and use ridesharing (and shared modes like Pool/Shared) instead.

ninjaedit: I'm in favor of this putting pressure on public transit for sure though. In SF its abhorrent how late/delayed MUNI can be...

[1] https://www.vox.com/the-goods/2019/8/6/20757593/uber-lyft-tr...


Do they make traffic worse? I think you can only compare them to people owning and driving their own car, which has to be parked all day when not in use.


I really wonder where Uber, Lyft etc. go in the future. Uber in particular seemed to betting hard on the fact that self-driving cars would make them wildly profitable but it seems like that is a long way away yet. And they're still subsiding rides in a lot of markets to make them look a lot more affordable than they really are.

I still think there's a market out there, but Uber in particular feels like it's grown too big for the actual market it can hope to occupy.


I hear this line of thinking a lot, and I still don't understand why Uber would be the one to rake in all the self-driving cash. What do they have that a new self-driving debt-free startup won't have?


The self-driving tech, presumably, and a ready-made userbase, brand, and presence across the globe. They could then seamlessly have both self-driving and human-driving delivery/transportation.


these guys have been raising prices and keep 30-40 percent cut from every ride but they still manage to lose billions? how is that possible?


Everybody seems to be focused on the fat loss figure, but what I find more intriguing is the relationship between revenue, 'reoccurring' loss and growth rate. When you see that their $3.1B revenue is just two times the solid $1.3B loss they had, you wonder what they spent their money on if they have a growth rate of just about 14%...


Is uber just an elaborate vehicle designed to redistribute wealth from investors to cab drivers and computers engineers?


And top management. In corporate America each person in top management earns as much as dozens to hundreds of their low end workers.


True, true.


Seems like there is a lot of mutual benefits between Uber and local taxi companies. Didi does this in China, where you can hail a taxi through the Didi app. Not sure if there is any revenue sharing setup but payment is made directly to the taxi driver. Seems like a win win for all concerned.


Prepare for the pop of the tech bubble once Uber goes under. It will likely coincide with the upcoming recession.

Stay tuned.


Car-sharing apps will eventually prove to be a better solution than Uber and its peers. Having a private driver at your disposal, even for a short time, is expensive and always will be. And right now, thanks to subsidies, Uber can compete with mass transit in many cities.



I'd be curious what investors of Uber (of which I am not) expected here. I don't think anyone expected a gain, but this article is light on analyst expectations. I would expect several years of this from a company trying to grow the way Uber is.


I think the issue investors had was the growth rate slowing and misses on revenue.

You can see the losses shrunk (lets for just a second ignore the stock based compensation because that should have been something every investor of Uber should have known was coming) but missing on top line revenue is pretty rough.


Uber was up for the day by 8%, too. Down 10% after hours: https://www.nasdaq.com/symbol/uber/after-hours


+8 - 10% = only a 2% drop from yesterday's price! :)


I'm not sure if you're joking... but... +8% means 108% stock price. -10% means multiply by 90% == 97.2% or a total price-action of -2.8%

This makes a bigger difference when big drops come into play. A 50% gain is offset by a 33% loss.


That's not how percentages work.


Car owners in small towns posting in here like "finally that fake gig economy is dying"

City dwellers posting the opposite because they rely on the product to make their lives work.

Here I am, stuck in the middle with you.


I'm interested in the investors who bought Uber at IPO.

What were they expecting to happen? A company losing money with no sign of being profitable any time soon. If ever. They expected the stock to go up?


Uber must have a viable business model that shows black figures in all areas they operate in. What does that calculation look like? I.e. what are the prices, driver compensation?


I wonder how many people know this high loss mainly comes from IPO costs and compensations which is almost 4 billion. So stop analyze something you don’t understand lol


Even if you remove Stock compensation their net income and FCF is negative. Their driver compensation is already poor. With governments starting to crackdown on driver they need to reduce costs.


They've been slowly hikin' rates in my geo for months now. Used to charge me $6 to work one way. Three months later it's now double that.


UberPool is so aggravating these days (slow, unpredictable) and taking a regular Uber within SF is like 3x the price what it was a few years ago.


I mean, haven't they kinda saturated the market?


That is a very narrow and shortsighted way of looking at. The ol' pull yourself up by the bootstraps.


> A majority of that [$5.2B] — about $3.9 billion — was caused by stock-based compensation that Uber paid its employees after its I.P.O. Excluding that one-time expense, Uber lost $1.3 billion, or nearly twice the $878 million that it lost a year earlier.

Not exactly as bad as the headline makes it sound, but still bad. EDIT: Still very bad. Obviously!


It's bad all the way, including the $3.9 billion, which is a massive sum. As Warren Buffett says, "if stock-based compensation isn't an expense, what is it?".


Exactly. It’s just an expense that you get to ignore for the time being because it doesn’t affect cash flow.


I don't know how the headline could be anymore objective than this. And the loss numbers not withstanding, a company bleeding money like a unicorn growing only 14% in revenue is pretty bad no matter how you slice it.


Looks like NYT changed the way they paywall, but all the text content is in the DOM (for SEO purposes I assume).

    console.log(document.querySelector('#site-content').innerText.replace(/(.{80}\w*)\s*/g, '$1\n'))


Is that a lot? I hear $5.2B is a lot...


Uber will go into bankruptcy, and it will be the starting point of the next worldwide economic crisis.


What percentage of the US population do you think has taken an Uber in the past month?

From January: "According to a new poll conducted by the Pew Research Center, just 36 percent of American adults say they have used ride-hailing services. Sixty-one percent say they have heard of the services but hadn’t taken a ride."

https://www.wired.com/story/uber-lyft-ride-hail-stats-pew-re...

Heck. I travel lots and it's probably been a few months since I've taken a Lyft or Uber.

I don't think it's as important a company as you seem to think.


I think the GP has a point though.

It's not as though UBER going under is going to tank the economy, but it will be a major unicorn going under, causing the entire silicon valley money-losing model to be questioned, leading to trouble raising money, layoffs which drag down the rest of the economy.

Similar to the 2000 crash.


That's not the world economy though. It's a bunch of highly-paid software developers losing their jobs and a subsequent (though probably rather delayed) crash in Bay Area real estate. Though that really depends on Google, Apple, etc. more than startups.

Not great for devs looking for 6 figure jobs in the Bay Area. But not clear how broad the effect would be--unless they were triggered by more serious external events.

And 2000 crash also was associated with other things like 9/11 so it's easy to conflate.


Agree that it’s not the world economy and stable big tech companies wouldn’t be that impacted, but people are looking for any sign that a recession is coming.

Several unicorns going bust could be enough to kill confidence in the markets and cause people to prepare for the worst (I.e. sell investments and stop spending).

Just a hypothesis!


What led you to this idea?


In Brazil it's cheaper to use Uber than to own a good car.


3.9 billion to employees in addition to sky high wages. How to get in on the next Uber?


Uber's cash-based compensation hasn't been that high, has it? A friend of mine who was making $150k base at a public company was offered $115k and purported stock of $500k. He needed the cash so he didn't take that offer. This was back in 2016. Things might have changed since then.


Biased headline, biased article.

1. 3.9 Bil was a one time cost

2. 1.3 Bil is not almost double 880 Mil. I mean that's just egregious.


> 3.9 Bil was a one time cost

That doesn't mean it isn't a loss?


It means it's less relevant for the future. People aren't worried about their current expenses, so much as what that means for the future.


Let's say you give me 20 bucks, and I drop it. But only one time.

Does that mean I didn't lose your $20?


Wasn't there a Seinfeld episode about this?


Let's say I take a piece of paper, tell you that it's worth $20 and give it you. And then you drop it.

Did you lose $20?

That's a closer analogy to SBC than losing cash.


Closer! Let's say you give me a coupon that I'm able to redeem from you later for 20 dollars.

Do you owe me $20?

This is the closest to what SBC is.

If the options are exercised, you're liable for that expense. It's a delay on the payment of the 20 dollars helping cash flow, and tax code yadda yadda, but you can't pretend that handing out vouchers for money to employees doesn't mean you're not liable for the money from an outsider assessing your financials.


Dilution of ownership goes in two directions. You pointed out that it could be less valuable than the book value. But if the company does well, then the cost of that dilution actually increases over time.


The other way to look at it is that potentially $3.9B worth of stock could be sold on the public market and further dilute the value of the stock.




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