It's been a recurring topic of conversation whether Uber would ever reach this milestone. The S&P 500 requires members of the index to be profitable in the latest quarter and over the past year, which Uber achieved for the first time in Q3.
Uber reported net income of $221 million on $9.29 billion in revenue in the third quarter, and in the past four quarters altogether it generated over $1 billion in profit.
> It took a $756 million pre-tax (non-cash) net benefit of unrealized gains related to reevaluating its equity investments. It means their stake in other companies had seen an appreciation in value, which the Company didn't sell or take profits as in unrealized gains and doesn't account for taxes as in pre-tax.
> The Company gained nothing and remains a bagholder in its equity investments, including DiDi, Aurora, Grab Holdings Inc. (NASDAQ: GRAB), and Zomato stakes.
Uber is turning into a financial company like other transportation giants (Delta, AA). Maybe for the best, as I think everyone understands that self driving Uber is a pipedream.
They're not free though, there's a cost to providing them.
The point (which was made somewhere by Unhedged in the FT (but I am failing at finding the article)) is that cash flow is somewhat deceptive for companies that compensate their employees with cash.
ubereats is actually kind of a scam though. They lie about some of their promotions, they lie about their delivery times and 'latest delivery by' times, they lie about 'uber cash credit', and they lie about refunds.
I've noticed this stuff occasionally over the years, and started collecting the evidence recently... it happens a lot more often than you'd think.
They calculate tips after fees and before discounts, so customers are tricked into tipping more. First noticed this after getting a buy one get one free deal and seeing a tip calculated at 2X what I'd expect
After fees is a bit tacky, but, at least in the US, I think it is considered good etiquette to tip on the original amount before discounts. I remember this came up a lot when Groupon was big offering a lot of BOGO deals.
I’ve never thought much about it, always consider it’s just a percentage. I am in Canada but it’s pretty much the same. Googling “tipping buy one get one” turns up this snippet from a Quora answer:
> The amount of effort the server devotes to your ordre is the same regardless of what the owner charges for your meal. So tip on the original, undiscounted price. And tip at least 20 percent.
Kind of funny, when it results in a higher tip I should consider the amount of effort.
I expect if I said I was only tipping $2 on a $100 bottle of wine at a restaurant because it isn’t any extra effort to grab an expensive bottle the poster might not agree.
100% of those tips go to the driver, and not in some sort of scammy door dash way that means uber pays the driver less. so it's important to note that "tricking" people into tipping more doesn't help uber's bottom line.
> it's important to note that "tricking" people into tipping more doesn't help uber's bottom line.
Of course it does. Their drivers presumably want a certain level of total compensation, but they dont care who it comes from. The higher Uber is able to convince people to tip, the less they have to offer in wages to retain drivers.
uber's bottom line ... as in what gets reported in the quarterly numbers. the tips absolutely do not go towards uber's income.
> The higher Uber is able to convince people to tip, the less they have to offer in wages to retain drivers.
this is unfounded speculation.
your complaint reads like you want to fault uber for not scamming the drivers. as someone else pointed out, after years of saying that uber would never be profitable it makes sense that there's some moving the goalposts here.
Yup, they will shower you with 'promo' offers like '2 for 1' (where the price is typically just doubled for a single item anyway), then try to charge you like a 36% tip. They also straight up steal many of the tips from their delivery people as evidenced my many such threads/concerns online.
and in the past four quarters altogether it generated over $1 billion in profit.
Yup...that's why the stock has done so well despite the insistence or chorus by the media since 2010 of how Uber is going to go bankrupt or burning cash. It's like Tesla in this regard--years of losses on capital expenditures--followed by huge and sudden profit as the initial capital outlay pays off massively.
The media from 2009 to 2018: "Uber will go bankrupt; it's losing too much money"
and here is Uber a decade later , and the stock keeps going up. Uber is highly cash flow positive on operations, to the tune of $600 million from its most recent earnings report or also comparable to Tesla in 2021, which the experts in the media were certain would be an impossibly. During Covid it initiated to a successful delivery business, Uber Eats.
I think this shows how the financial media can be disregarded as a useful source of investment advice or insight. The VCs and other investors who keep investing in uber despite losses were right, as , similar to Amazon, they knew the losses were temporary and to build the outlay/infrastructure of Uber's business.
> I think this shows how the financial media can be disregarded
to be fair, the actual financial analysts have been very bullish on uber for a long time. the stock has been overweight or buy for most of its public history, at least by my recollection (I own a chunk of stock so i've been paying some attention).
it's on forums like this though, where folks are inserting their desire for uber to fail because they don't like the company or the (former) executives or whatever, that I hear the bankruptcy drum being beaten.
If this were surprise news maybe, but this is the type of news that is priced in slowly over time and somewhat expected. Basically when sophisticated people bought uber a year ago one of the drivers of a higher price was the assumption it might be included in the S&P500.
A lot of things in finance and markets are self fulfilling prophecies like this, for example just look at the fed. They are the classic example of expectations > action.
There’s still a jump proportional to how unexpected it was by the market as the bets are settled, so to speak. Until it’s announced, there’s some contingency that thinks it won’t happen and is putting downward pressure on the stock. Eyeballing the small jump here hints that it was a small contingency.
I wish there would be a way to just buy sp500 minus a list of firms, so I could invest in a diversified way without going into Uber and friends (or any other firms that make profits on paper without the cash flow to back it)
> firms that make profits on paper without the cash flow to back it
Uber is cash-flow positive [1].
Due to stock-based compensation, many profitable tech firms hit this metric before GAAP. Put another way, if you owned the entire business, you could sustainably extract those profits.
Fractional shares would work, if you don't want the expense and unreliability of shorting.
Simplest thing would be to find an actively-managed mutual fund that focuses on what you want. (Warning: What you want is probably to lose money compared to the rest of the market.)
Be careful. The indexers might hear this and reassure you that the S&P is only optimal with Uber included at exactly the date it did and the fund will fail otherwise.
Most trading APIs are fairly simple, TD for example is very easy to use and very accessible. IBKR is a bit weirder in both protocol and access, but, works very well.
Uber will continue to grow in profatbility. As the platform matures and continues to grow in revenue, the overhead development cost will actually decline, not just as a percentage but as an absolute number as well.
Furthermore, Lyft being borderline bankrupt helps Uber take more advantage of the most profitable and largest market.
Mature in a sense that Uber has invested billions in operations to get deals with cities & airports, developer legal expertise globally, and has technology that allows them to operate globally.
Saying Uber is "just an app" isn't a strong argument. It overlooks the marketplace dynamics that in themselves are a huge moat. You can also say "Instagram" is just an app.. But good luck trying to recreate that level of success.
It's similar to Tesla in this regard--a decade of losses from 2010-2020 and then -boom--huge cashflow once the infrastructure outlay and customer base acquisition pays off. 'Smart money' was right all along to keep buying the dips. Uber is a play on not only on transportation, but also Ai, logistics, delivery, etc. It's like Amazon in this regard.
Ok, so I'm not very educated in the stock market. Could someone help get this straight? Uber raised like 20 billion privately + 8 on their IPO. After 14 years now they have made their first profits - 1 billion in the last 4 quarters. This just doesn't sound good to me?
Another reminder that the stock market is not about how well a company does, it's about how well its stock can be traded. Uber has never made a profit until just now: it could just as easily collapse tomorrow, but it's a good trading stock.
It means a whole bunch of people are going to see this title, not read the article, and go "looks like Uber is doing great" when reality it's incredibly far from doing great. The only thing "doing well on the stock market" signals is that a company's stock trades well on the stock market. It literally tells you nothing about the company itself.
Uber reported net income of $221 million on $9.29 billion in revenue in the third quarter, and in the past four quarters altogether it generated over $1 billion in profit.