Is anyone really surprised? Years before the IPO we knew they were not profitable in the least. We knew VC cash was subsidizing rides. We knew that their future was purely dependent on a self-driving car fleet where they could ditch drivers (and their pay) completely. This on top of a horrible culture with pretty lousy ethics and morality.
This is how this was supposed to play out and everyone here (on HN) knew that. The only people suckered were public investors during the IPO roadshow.
This reads like the usual Uber criticism and doesn't touch on the lockup. The market knew the lockup was ending, so it should have been priced in. Dropping when the lockup ends should mean that markets underestimated how many insiders wanted to cash out, and employee sentiment is worse than market sentiment.
> Dropping when the lockup ends should mean that markets underestimated how many insiders wanted to cash out, and employee sentiment is worse than market sentiment.
Uber's volume is 700% compared to last week. With volume-swings like that, there really isn't much you can do.
You can only short if you can find someone willing to lend you shares. Shorts can "run out of shares to borrow" in practice. Similarly, you can buy put-options (or sell call options) on the shares, but only if you can find a counterparty to accept the "other side" (that is, a short-put or a long-call) of your bet.
Run out of counterparties, and it becomes impossible to trade. Reality becomes evident at times like this when volume is way, way, way higher than anybody expects.
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I admit that I don't know what happened today with Uber, but we can't just assume "invisible hand / market is always perfectly efficient". Reality simply doesn't work like that.
No one likes unquantifiable market factors like confidence, which is hard to suss out and can rapidly deteriorate without yet showing up in technicals.
I dunno, but I wouldn't read too much about employee sentiment into this.
Say you have $150k in savings and $x million in Uber stock. Any competent financial advisor is going to get you to diversify out of Uber. You'll miss upside, but prevent that $x million from potentially going to zero based on the actions of just one company.
Is that going to materially change the ability of a non millionare to purchase a house in the bay area? Honest question.
If in effect they are all going to compete with each other an other (mostly IT) millionaires for housing and pay slightly more, it doesn't seem like a real shift.
This. I sell any stocks as soon as I can after vesting (trading window permitting) and then diversify into other holdings. I still have RSU's that have not vested that I get to enjoy any upside on.
> Any competent financial advisor is going to get you to diversify out of Uber
Agreed, but they seem to have no problem suggesting putting 50% of your net worth in a home.
Having been though a company going public, while that advice is correct, the endowment effect is a real thing, and it's shocking how long people hold on.
The lockup period is a known event (nothing to be suprised about). The market already adjusted the stock price to reflect the anticipated insider cash out after the lock up.
Any rise or fall in the price at the specific time the lockup ends is because the reality is different than what the market anticpated.
The 90-day average volume for Uber is ~10-million shares per day. Lets pretend you knew that Uber was going to drop today (last week). How many shares do you sell short?
That 10-million average is ALL market trades, buying, selling, etc. etc. If 10-million shares were short-sold, it'd take a full day to cover all of those shares (based on average volume). There's only so much trading activity that happens at any given moment in time.
Well, what happened today? Uber is now up to... (check's Yahoo finance...) 95-million volume, and counting.
Huh. Well, I guess you could have sold more shares short last week. But given the 10-million share 90-day average volume, there was basically no way to predict 95-million shares traded before noon come Wednesday.
If you expected 2x or 3x the volume, you were proven wrong in the 1st hour. Between 9am EST to 10am EST, over 40-million UBER shares traded, representing ~400% of the average daily volume in just 1-hour.
But getting it exactly right isn't the point, is it? You were asking how many should you short, if you think the market hasn't priced the lock out in ,the answer doesn't have to be optimal, it's just more than the usual volume.
What am I missing? For sure you couldn't know it would be 95 mil, but is 20 really that speculative?
Uber has zero competence in fleet management. Everything they do is to avoid investing in a fleet.i would argue that rental car companies or car dealers are positioned much better.
Weird that this is being downvoted because Uber has shown no interest in acquiring and managing assets (self-driving cars or even their own cars) which is a completely different business than being a marketer for independent taxis. If self-driving cars become a business it seems like rental car companies would be ideally positioned to take advantage of them.
Once a VC-funded tech company starts maintaining inventory, actually assets, then things get real pretty quick. The only reason these companies become unicorns is because they don't have the overhead of owning stuff. Then you are just any other company.
It's very reasonable for a small company to avoid owning assets and focus on markets where the flexibility of not owning them is an advantage. They don't have money anyway, nor enough people to manage those assets.
It is completely crazy to expect large companies that are burning money to grow not to go after the largest markets just because it needs investment... Yet, that's what you described, and AFAIK you are completely correct.
Uber is the ultimate middleman company. It would only work if people bought their own self driving cars and rented them out to Uber to make some extra money.
At which point of course owners would shop for top dollar and riders would shop for rock bottom and they'd still be stuck lighting money on fire to subsidize rides.
And it's difficult to see how those ad hoc rentals can compete with a fleet management company that has economies of scale and optimizes for short-term rental. Car depreciation is more mileage-based than time-based so it's reasonable to assume that the rates people would get would tend to reach a point where they were pretty close to the cost--with perhaps an exception for times when there's extraordinary demand.
Yes and no. I can certainly agree on a theoretical basis, but the black cabs that have crawled around London since the 50's are privately owned and built to last.
Sure, but the same could be said of Tesla. Horrible employer, constant exec churn, unbelievable cash burn, what appears to be structural losses.... But Tesla still has a 56B mcap today. Uber is 46B. These VC/equity issue cash furnaces can go on longer than most can fathom if a subset of investors believe in the long term vision.
I think part of the issue is market timing. If we went back to June, Tesla is sitting at a $33B market cap after a huge slide. Uber started sliding in August. If we were just looking at market cap, Uber's had been decently stable for 3 months post-IPO and is now sliding. Tesla's would have been at its low point in June. You could have said then, "same could be said... but Uber is sitting at a $71B market cap while Tesla has slid down to $33B".
I do think Tesla is overvalued, but presents less risk than Uber. Ultimately, Tesla is looking to be a car company. $56B is a bit expensive for a car company, but there are examples. GM is $54B, Ford is $35B, Fiat Chrysler is $25B, Volkswagen is $100B, Toyota is $230B, Honda is $50B, Nissan is $27B, and Mazda is $6B. I think Tesla is overpriced because I think it's highly unlikely that they're the next Toyota. In 10 years, I think they might be the next Mazda or GM or Nissan or Honda - representing no gain to a significant loss over the next decade. Even if they become the next Volkswagen in 10 years, that would represent a less than 10% annualized return for something that's unlikely to happen. Even if one thinks Tesla is making a great product, the likelihood of becoming the next VW is very slim. Heck, Mazda makes some great cars and sells nearly 2 million, but they're only a $6B company.
But fundamentally, building cars and selling them for the amount of money people buy cars at is a reasonable proposition. Tesla's quarterly reports show that they can make them profitably and that the solar business is weighing on their financials. I can see Tesla being a profitable, sustainable company. They've proven out the economics of their batteries, drive-trains, manufacturing, etc. enough for me to believe there isn't an impediment to them continuing to exist indefinitely. I don't think they're going to justify their high valuation, but I can certainly see them becoming a Mazda, Nissan, or Honda - well respected, profitable, etc.
I mean, Tesla had $143M in GAAP net income in Q3.
However, I think there are big questions on whether Uber can stick around indefinitely. As states turn against the gig economy, does that wreck their business model? As self-driving seems many more years away, do they have the runway to keep going? Even with self-driving, are they the ones that will capture that market or will a company without the losses from a driver-oriented business take over that space? Will customers give a company like Uber margin or will they constantly be searching for the cheapest option?
I think the auto industry in general will face challenges over the next couple decades (another reason I'm less bullish on Tesla), but Tesla (at least its auto business) is fundamentally traditional. You give them tens of thousands of dollars, they give you a car. It might be an electric one with interesting new toys, but it's a traditional transaction and one that seems to provide good margin as the ramp-up costs start to wind down (launching an auto company takes a lot of time and money). Tesla is trying to convince people that they want to buy a Tesla rather than a Nissan. Uber is trying to convince people that they want to buy a lot more taxi rides and the only way to do that is by making them cheaper. Can they make that happen? Even if they make that happen, is there a barrier to someone else coming in and competing?
Please stop comparing Tesla with car companies. Tesla is a tech company, like Apple iPhone branch (which outlived, say, Nokia and Ericsson and Siemens). Most valuable part of Tesla is their IP and datasets. And don't forget their supercharger network.
Tesla is toxic because the founder has a vision, sets tight constraints and pushes hard on people to meet them (hello Amazon). Uber is toxic because there are too many people sitting on a pile of investor money, hence politics and infighting. As an employee, you may want to avoid both, but as an investor, you need to see the difference.
Tesla has arguably a more clear path to a profitable future. Uber's path to profitability is arguably much more speculative and dependent on risky technology advances.
Agreed. Not only did Tesla have a clear path, but they had a product that could sell at much higher margins, better quality control, not-so dubious legal ways of selling them, paid their employees decent wages (Uber... does not), and they won't have technology that can be copied and repeated by a second year student at uni.
Uber and Tesla are not anywhere close to directly comparable.
After all of the pennies are counted, the cost to pave the way for the future where other companies take market share after the dust settles is astounding.
Had they rolled their 1st mover advantage into building and smoothering markets (think scooters) with IP locked autonomous taxis, a trillion dollar valuation would have been acceptable.
Elon has overpromised many times in the past - and probably it won't happen in 2020 but I still believe that Tesla is leading the driverless competition. They have the data.
Uber is a huge mess because the narrative is not credible. Dara is trying to tell a story about fast grow + profitability.
The reality is that they have three types of businesses. 1. Businesses that are slowing down dramatically, e.g. Ride Share. As they raise price it may have negative growth. 2. Businesses that are growing by unsustainable subsidy, e.g. Eats, Freight. 3. New business that are purely speculative. Uber Money, Autonomous, Flying Taxis.
They have no businesses that fit the fast growth + profitability. Dara is trying to balance the three categories above to pretend that it is happening.
> We knew that their future was purely dependent on a self-driving car fleet where they could ditch drivers (and their pay) completely.
I've never really understood this.
Their drivers do more than just drive, don't they? They also supply the cars, and deal with maintenance of those cars. If Uber switches to a self-driving fleet and ditches human drivers, who will own the cars?
If Uber owns or leases the cars, Uber will have to be dealing with maintenance. I suppose they could go to a model where people who have bought self-driving cars can let Uber use them when the owner does not need them, but then Uber has just replaced paying a zillion drivers with paying a zillion self-driving car owners.
So, assuming they go with the model where Uber is the one handling maintenance so they don't have to have a zillion pseudo-employees I don't see what would stop other companies from doing this better.
If Waymo wanted to go for that market, for instance, they have better self-driving technology, and could probably get integrated with the Google Maps app that is already on everyone's phone so they wouldn't have to convince people to download anything. Sure, Waymo doesn't currently have, as far as I know, anything set up for managing and maintaining a large fleet of cars...but neither does Uber.
Or what about the car makers? Many of them are working on self-driving, too. I could see some of them deploying self-driving taxi fleets, with maintenance handled through their dealers. This could become a new sales channel for them--new car to their taxi fleet for a couple years, then sold off as a used car which the buyer can be assured was well maintained and still has a good warranty.
Imagine your self-driving Audi/BMW/Mercedes/etc taxi dropping you off at home at the end of the day, and then presenting you with a report showing how much you used the service over the last year, how much it cost you, and how it would have been cheaper for you to have your own private self-driving car, and offering to sell you that very car. If you accept, the car drives back to the dealer, gets cleaned, inspected, tuned up, and drives back to your place to be waiting for you to take ownership the next morning.
In summary, owning and operating a fleet of self-driving taxis is sufficiently different from what Uber does now that I'm not sure that Uber has any particular advantage over anyone else who might want to do so, and might even be at a disadvantage, so I'm skeptical that this is their future.
The maintenance cost of 1000 cars owned by one company are most likely going to be less than those of 1000 cars owned by 1000 owners, just through negotiation and bulk maintenance pricing.
Uber is banking on people not switching to whatever other self-driving service comes out, due to being a household name. I don't think very many people outside of SV know what Waymo even is, everyone has taken an Uber though.
I think you'd be surprised at Uber's profile outside of some relative bubbles. Pew Research last year said the number of Americans who have never taken an Uber has gone down but it's still something like 36%.
I live 40 miles outside of a major city and near a couple of smaller cities and Uber barely works for me during daytime hours. I couldn't begin to use it for an early morning airport run.
Everyone has heard of Lyft though, and in larger markets Juno. If Uber management is truly banking on brand loyalty of all things, especially based on their behavior, they are idiots. Nobody trusts Uber.
If Waymo arrives with a more cost effective solution, that’s it.
This will sound very naive (because it is), but I thought that the free market would see through the bullshit and value them appropriately. That is happening, just far more slowly than I imagined.
The valuation was largely over the general hype for self-driving vehicles. Those who thought they were imminent must have just been ignorant to how slow regulation moves and how risk averse corporations are to the potential fallout of being "first to market" with a self driving car that ends up with someone dead regardless of fault.
You also had a bunch of execs/founders in SV particularly trying to outcompete each other in their claims about how soon autonomous vehicles were going to arrive. This combined with tech that got to the point where it at least demoed well and a lot of people who really wanted to believe they'd never have to drive a car fell for it hook, line, and sinker.
There will certainly be regulatory and liability issues to work through but if the tech were really ready for prime time I actually don't believe those those are showstoppers.
I mean, if no one was surprised the stock price wouldn't have moved a lot when the lockup ended. Clearly most everyone was surprised (including you), otherwise you and everyone else would have shorted Uber or bought some puts before the lockup ended therefore neutralizing any price movement.
No everyone on HN didn’t know that. Posters on HN are routinely making excuses for money losing tech companies and consider a “success” another rounding of funding at an increased valuation and being able to pawn off bad businesses to the public markets.
> We knew that their future was purely dependent on a self-driving car fleet
This is by far Uber's best trick. Convincing people that there is an end game they can win.
I see no way that self-driving saves them. Either they'll have to buy/lease/maintain a massive fleet of cars or they'll have to rent self-driving cars from the owners. Either way, in the near future, how much cheaper can it be than paying humans peanuts?
>still the largest and most successful company to come out of SF this decade.
That's a lot less reflective of UBER and more reflective of the type of startups SV is trying to take public. Look at any other SV Unicorn that IPO'd...take Twitter that IPO'd in 2013, it turned a profit one year since going public.
It's not successful though. WeWork is still valued at 47B technically speaking today. They are a company that only loses money, has a horrid culture and does some morally reprehensible things.
Their true value is their logistics software. If they would lease/sell that to other industries they would be rich beyond belief.
>We knew that their future was purely dependent on a self-driving car fleet where they could ditch drivers (and their pay) completely.
Nah. Right now their business model relies on having their labor bring their own capital. I've always seriously doubted that cutting the labor out of the equation and replacing it with capital that Uber now has to furnish and maintain was going to save all THAT much money.
The numbers are all over the place, but from what I've been told once you factor in mileage costs, gas, and maintenance + cleaning of the vehicles most rideshare drivers are only earning somewhere from $1.50 to $3.00 an hour. If Uber then has to internalize all those costs plus add all the software maintenance/development costs of their self-driving AI how much is that saving them really? Is it going to be enough to defray the billion and a half dollars they're bleeding every year?
No, their long-term game was always going to be to undermine public transit and personal vehicle ownership through an artificially cheap business model and then once their monopoly (or oligopoly with Lyft) is firmly entrenched to boondoggle municipal governments into subsidizing rides for them instead of spending money on building out transit.
>Right now their business model relies on having their labor bring their own capital.
That is really post-Marx. It is a new economy structure enabled by technological progress, and which couldn't have existed and hasn't been predicted until it was enabled by technology and was created by Uber and the likes. In marxism, ie. in classic capitalism the capital owner extracts added value which is created by the labor applied to the capital. In the post-marxism economy the birth of which we're witnessing today Uber, by the owning of the information network, manages to extracts the added value which labor creates by applying itself to the labor's own capital. Marxism economical theory naturally postulates socialism after capitalism with the socialism being the maximum entropy of capital ownership distribution, and that is what we've observed in the last 100 years. These days with the rise of technology that got the post-Marx economy enabled the future driven by that economy isn't socialism, its the new fundamental state of society - the network.
let me guess - 1. you have so far lived only in one economical system, probably capitalism, and in particular you have never lived in the socialism 2. you don't have degree in Math 3. you haven't read Das Kapital
So, you basically don't know most of the things what i was talking about. No wonder it sounds gibberish to you.
People are dumping Uber with over 79 million shares traded already. Compare that with an average of 10 million traded daily leading up to this.
Also weigh this against the fact that Uber had a relatively small float from its IPO compared to the shares coming free now. They had about 200 million shares available on their IPO and 4x that coming off restriction which is a huge ration.
They tried their best to boost their IPO at the expense of their employee's and the results are.... well not great.
I guess the good news is that with this lock up expiring 90% of the available Uber shares will now be available to trade so within the next week or so we'll find out what Uber's new price equilibrium will be.
Lots of open interest on the weekly $26 puts at the moment with nothing coming close on the call side, which indicates that not too many people expect a pop.
I guess the one silver lining is that Softbank probably won't be too active of a seller which should help employee's jumping ship.
Will be interesting to see the staff turnover at Uber in the next 6 months.
uber just had a big block trade one at a 4% discount, this is a pretty big discount from what a block trade would normally cross at which indicate that the buyer expects a larger drop to occur.
So looking at their cash position, they have about $12.5B in cash wich is good and total debt of $7.8 so lets call it $5B in cash on hand with free cash flow estimated at -$3.8B a year, so charitably 1.5 years of cash flow remain if the losses don't increase/decrease which isn't a very good assumption given that the losses have accelerated from 2017 and 2018
For something positive East is about 13% of revenue and "other" is 2.3% of revenue so they are starting to diversify their revenue, though at tremendous cost to their profitability.
Revenue is also pretty diversified by country with the US being only 53% of revenue which is a big accomplishment!!!
What's their cash on hand position, I believe I saw that there's 13B, after adding 8B in the IPO, that seems like a ton of cash on hand for a business that isn't showing any signs of turning of profit.
Could they not just without any further cash infusion continue to lose similar amounts for the next three years and be cash solvent. Does that then not give a big incentive to figure out how to become profitable in the near term?
> The core business is very profitable. Loss-making is happening in their less mature product categories and expansion efforts.
Not really. It is true that in their non GAAP accounting they broker out revenue by segment and showed that "Rides" made a profit of $631M but they also include categories for eats, freight and other bets that lost money.
But the kicker is that they introduced a category called "Corporate G&A and Platform R&D" which lost $621. If you look at this category which includes
> "Corporate G&A also includes certain shared costs such as finance, accounting, tax, human resources, information technology and legal costs. Platform R&D also includes mapping and payment technologies and support and development of the internal technology infrastructure. Our allocation methodology is periodically evaluated and may change."
SO basically they are saying Rids is profitable if you don't need to have a business to run it, ie no lawyers, HR, execs, payment systems, cloud infrastructure or employees to develop code.
TL/DR rids is profitable if you ignore the cost of running the Rides business and only look at the income that it brings in, which is true for any business that has income.
And one of the benefits of an IPO is that the market discipline management to focus on being profitable (assuming they're not playing games with from multi-class voting shenanigans.) It's funny that this role of the market is often derided ("Management isn't thinking long term -- they'll do anything to make next quarters numbers...") but it's very important.
Take a look at their most recent 10-Q[1] where you'll notice their claim of profitability relies on the completely made up (and non-GAAP) metric of "Rides Adjusted EBITDA".
From page 36 of the filing ("Segment adjusted EBITDA" collectively references their adjusted EBITDA metrics for rides, eats, and freight):
> Segment adjusted EBITDA is defined as revenue less the following expenses: cost of revenue, operations and support, sales and marketing, and general and administrative and research and development expenses associated with the Company’s segments. Segment adjusted EBITDA also excludes any non-cash items or items that management does not believe are reflective of the Company’s ongoing core operations (as shown in the table below).
The referenced table includes $1.8 billion in Corporate Governance. That one line item completely wipes out their "Rides Adjusted EBITDA" profitability.
They're only profitable as long as they don't have any expenses. And that isn't really how "profit" works.
Because (s)he is not correct. "Adjusted EBITDA" =/= EBITDA. Uber rides are only profitable if you use their bullshit non-GAAP numbers. If you do the accounting in the proper way they are not profitable.
I always look for a discussion of "how much money does Uber need to make to cover all the fundraising" and I never see anyone doing that analysis. Instead it's just "they're not profitable" or "they turned a profit".
Uber took a few billion dollars of investor capital over the last decade. Let's assume we live in the world from the textbooks where the value of Ubers stock is actually the net present value of all its future earnings (hah!). What do those earnings need to look like for the investors to turn out to be right? As in, would they have done better investing in some other asset?
My theory for why you never see this kind of analysis is that it doesn't matter to anyone. Nobody is trying to actually build a business that will generate money with their investment. They're building hype machines they can use to sell their stake to someone else before it all explodes. It's speculation and manipulation all the way down.
Part of the misunderstanding, at least as I understand it, is that for a growing company the vast majority of the expected earnings come a very long time in the future.
Peter Thiel talks about this for Paypal in Zero to One, IIRC in 2001 their projections showed that like 75% or more of the net present value would come in 2011 and beyond.
I don't actually know how you make a model like that, clearly you need to assume a maximum size and a decline at some point in the future or else you would expect infinite future revenue? But obviously people are doing that, amonth other types of models for Uber and deciding it's still worth $45 Billion as of today. If not the stock price wouldn't be that high. I think the reason you don't see it is just that it's more advanced than what a regular journalist is going to do, and I assume you're not paying for the right specialist publications to have access to that level of reports.
If you still think it's completely crazy, then what are you waiting for get out there and short the stock, there's free money to be made!
By your logic, it should have been priced in at IPO, since we knew back then that it would happen.
However, note that back then we also didn't know what else was going to happen. We didn't know if earnings would go up or down, or a lawsuit would emerge etc.
After earnings (a few days ago), we had a "purer" expression of the effect of the lockup expiry.
In other words, we had the information but there was also a lot of noise at IPO (or a month ago etc).
All timescales happen simultaneously on the market. So there is a slice of the market that’s priced how you say: IPO plus many years. There’s another slice that’s priced on the day’s expectations, another slice on the quarter, etc.
How big each slice is varies per company. But OP is correct that for all slices that contain yesterday, yesterday is priced in. Which includes all slices that were in the order book yesterday.
Some people did get out between IPO and yesterday, and they would not have priced yesterday at IPO.
I will just point out what I see as a contradiction in these statements:
If getting out of the stock after the IPO and before the lockup expiry allows you to "escape" the effect of the lockup expiry, then you are implicitly saying that the expiry was not priced in.
I don't know what it means for a "slice" of the market to be priced a certain way. Uber has a clearing price which reflects all the opinions at any point in time. What is a slice?
Basically, sort all shareholders by planned sale date. Then you can slice them into “bins”. Let’s say we want nine $5B bins. They will each have a median planned sale date.
Made up example numbers:
$0-$5B of market cap: plan to sell within 24h
$5-$10B: plan to sell within 30d
$10-$15B: plan to sell at the end of the quarter
etc...
For any given future event, it will only be implicated for some of those slices. So the cost of an event will only affect that part of today’s order book.
All timescales do happen, however, the actual share price (the last trade) is decided by the very very short term order book, which is very sensitive to new information.
You are correct. Everything is priced in, alas, with probability of occurrence. If you look at option pricing the probablity is part of Black & Scholes formula.
Also, the market did not know about earning,this is a surprise information (or it should be).
I would also argue that the market priced in new information within milliseconds.
I reckon that's generally true, but I'm trying to think through if it applies when composition of "the market" changes, e.g. when people that couldn't participate before (in lockup period) can participate now.
What does the assets of the fund have to do with anything? If a bunch of new sellers are (literally) unleashed, what matters is how much depth there is on the bid side of the order book.
And Bloomberg had a good one, though I can't find it now.
I am not endorsing any of these, but the difference between a bull and bear (or, if you will, a valuation higher than what we have and lower than what we have) is probably how much you think additional business are worth.
So if you think that food delivery, logistics etc will amount to a large, valuable business, I think you are bullish.
The purpose of that distinction is to tease apart the effects of the lock up expiring from other effects (anticipation of the lockup expiry and after effects of the earnings call).
It is not to render some verdict on the one true value of Uber.
From Q3 results, it sounded like the company was profitable just on ride-sharing itself and was losing a ton of money on eats + cargo + autonomous vehicles R&D.
I wonder what a fair valuation would be for just the ride-sharing business if they were to spin off / shut down every other part of their business and essentially become Lyft.
I wonder how much cost offloading was done to make ridesharing look profitable and everything look like a loss. Uber needs a positive narrative of some kind
>From Q3 results, it sounded like the company was profitable just on ride-sharing itself and was losing a ton of money on eats + cargo + autonomous vehicles R&D.
Only if goofy non-GAAP accounting is the standard (it's not).
The company claimed to be profitable on rude sharing on an “adjusted EBITDA” basis. Which is basically a made up metric where they excluded over a dozen expenses.
Some unsolicited advice for any Uber employees here on HN: You may want to seriously consider selling all vested shares. The price not be what you are expecting, but, from my own personal experience, and "most expert advice", it can be better to sell and diversify. Many one-time high-fliers, such as Zynga (where I previously worked), never got back to their IPO or lockup expiry price.
I was at Groupon at IPO. IPO’d at $20. Dropped to $3.50 by the time lockup ended. I sold because I needed the cash. 7 years later, it’s trading at $2.90. The market isn’t perfect, but shenanigans with private company valuations are usually worse.
I think Lyft and Uber hurt public transit. There has gotta be a better way to make American cities more livable and accessible without adding additional car traffic.
Buses, denser house, better urban planning, metro rail and subway additions are the way we need to go like Asia and Europe. Uber and Lyft are not doing well in Europe and Asia because leaders realize they make traffic worse and are trying to focus on zoning and transit instead.
> There has gotta be a better way to make American cities more livable and accessible without adding additional car traffic.
This problem and its solutions are not new. The solutions weren't implemented because there wasn't enough desire to implement them, and I doubt that has changed today.
American culture pushes the idea of personal vehicle ownership equaling success, and if you have a car you're going to drive it instead of taking the subway.
I live in London. It's not dense, but has (supposedly) good public transport... tons of busses, taxis, and probably better underground network than most other EU cities.
Uber is still a blessing. Cheaper than cabs, better managed (I can order it anywhere, monitor its progress, don't need to care about payment, ...).
Don't get me wrong, I think the company is pretty shit, but the service is extremely valuable!
I don't know what you think can be done, because all the "solutions" you offer are just plain unworkable and unfeasible. Ride sharing, aka taxis, was a solution to that problem even though it may have not only just been a con job to take over the taxi industry in every single city and town, but it also surely led to people using Uber instead of walking a few blocks. That may have abated a bit since the introduction of scooters, but even though that also "hurts public transit", I will leave that be.
The reality is that public transit hurts public transit way way more than anything else, just like taxis not only destroyed themselves, but they alone made Uber/Lyft even possible. Just like without taxis being an utterly miserable experience in most cases (which clearly has now been normalized in U/L to some degree) made people flock to U/L even with efforts like Curb (and whatever they were called before that) in addition to some other efforts to organize taxis in an app; so is and did public transport sabotage itself too.
People who advocate for public transport (and I must assume that includes you) tend to not at all understand the true costs and issues with public transport beyond the obvious ones like subways/trams being stuck on rigid lines or busses that are limited in their route. What those people do not take into account is even just the full financial cost of operations, not even to mention future obligations due to unfunded liabilities/benefits for utterly unproductive/lazy government employees, and all the accompanying authoritarian/tyrannical gaslighting propaganda that comes with it, e.g., "how dare you point out or note the crimes and violence on BART. You are a horrible person for not subjecting yourself to it". But reality is that, e.g., the NYC subway system is HEAVILY subsidized, which makes it so "cheap", just like all the European public transit is even more subsidized and makes it even "cheaper".
Just for example because I was looking at the figures recently, the WashDC Metro system only receives half its operational budget from fares, and the other half is drained from surrounding counties and the city of DC. And that is at a cost of commuting to and from work into and out of the city of about $7.5 every single day, partially due to recent fare increases. That's ~$2,000 per year to commute to work when one is to believe that being jammed into busses/subways should produce some kind of savings over owning and operating a car, which would clearly not cost $2,000 in costs for commuting per year unless you are talking about a mid sized luxury vehicle.
You are wildly mistaken, at least regarding Europe, why U/L are doing poorly. They are doing poorly there because the people still care about maintaining a line against the very "disruptive" types that SV and YC for that matter is full of. People in Europe at least for the time being still have a shared common bond to maintain the line against pure capitalists that have demoralized and broken through that line in the USA in particular, where no such bonds of unity and common interest exist anymore to hold the line against the abuses and excesses of the pure capitalists like basically all the tech companies are. Uber is, ironically successful in the USA specifically through abuse, fraud, manipulation, deception, plunder, and degeneracy. Like I said, at least for the time being, that defensive wall has not yet been broken trough yet in Europe, even though it surely is coming, with the invasion of the same kind of foreign low wage serf labor that fuels U/L.
Jeez. Maybe they should rename the company 'unter'.
On a more serious note, I'm not sad to see this. I hope companies trying to disavow all corporate responsibility by claiming they're only responsible for the technology behind their platform and not the effects of running the platform the way they do is only a fad. Their stock price obviously isn't a proper indicator of this trend bucking, but I'm glad that they, being the poster child for this sort of foolery, aren't the apple of every tech investor's eye anymore.
I wonder if lockup agreements will ever be made illegal.
I doubt it, since they’re primarily there to ensure the original investors get an ROI, but they sure seem to be an overall negative incentive for the general public / retail traders to purchase stock with lockup agreements, given the earliest they can buy is right when the IPO pops.
> I doubt it, since they’re primarily there to ensure the original investors get an ROI, but they sure seem to be an overall negative incentive for the general public / retail traders to purchase stock with lockup agreements, given the earliest they can buy is right when the IPO pops.
That seems slightly backwards. The lockup protects buyers in the IPO more than sellers: it means you can be confident that the market isn't going to be flooded tomorrow. Anyone who bought in the IPO has now had plenty of time to get out, if they wanted to.
It's crazy that in 2019 investment banks are still using such a blunt instrument to manage shares becoming available for trading. It would be trivial to let insider shares trickle out for some period of time enabling insiders to monetize while avoiding a plunge.
I was hired at Uber with the promise of 49$ a share, and boosting that it will go up to 75 by the time of IPO. Naive me at the time didn’t research more on it, but these were just some numbers thrown at me in 2015. I will never trust a recruiter offering me snake oil again.
That said, I left after a year and a day, and this price makes my compensation close to less than new industry hire.
With the layoffs, the quarterly earnings, and now this, it sounds like Uber’s having a bit of a tough time. Sentiment about the viability of Uber long term is quite negative.
Can anybody at Uber talk about what the morale and culture is like right now? I’ve received a job offer and I’m struggling to reconcile what I’m observing externally with what I’m hearing from the small set of people I’ve spoken to.
A quick reminder to everyone that buying all time lows on a stock is one of the worst equity strategies possible (statistically). Go ahead and run a backtest.
On the flip side, buying stocks at all time highs, while counter intuitive, is one of the best equity strategies available (with trailing stops).
Buying Uber stock here is borderline moronic until the trend turns around.
What surprises me is that so many tech companies issue huge amounts of RSUs and their stock price hasn't tanked. Do people actually keep their RSUs in their employer? I sell asap, I'm not going to be Enron'd. One day this whole house of cards will collapse.
Would be great if anyone had some figures on how many employees sell vs keep their RSUs.
Or you could just look at what happened with WeWork employees as a recent example. I don't see why anyone (especially in your 20s with significant net worth tied up) would hold onto this once the lock is up.
A good discretionary strategy for these sort of things is to do a long volatility options trade on the day lockups end. Either the market has overestimated the number of shares being sold or has underestimated it. Either way, you make money. Of course ATM options are almost always more expensive if they expire close after the lockup period ends. But even so, in my experience, you can make some money reliably using this signal and a little discretion.
How much wealth was redistributed upwards? Who benefited from Uber other than the founders and maybe 1% of the entire business?
I find it highly unethical for such a business to be able to ignore so many laws most of which protect the have nots to build a system that moves most of the profits to the haves. Then dump the broken business to IPO for fools to buy up and loose as well.
Riders and drivers who got subsidized rides and income, were probably the largest beneficiaries.
Uber employees, VC partners, on the Silicon Valley side. A lot of other tech workers have benefited from the upward price pressure exerted on developer salaries not just in Silicon Valley but around the world.
Who got screwed, if Uber’s valuation never recovers - late stage investors, companies doing similar things such as in food delivery.
Taxi and delivery customers benefited. That’s why there were 10 billion uber tickets sold in 2018.
Maybe siting in a taxi shouldn’t be a $100,000 a year job.
The only benefit I see between a uber driver and a licensed taxi driver is that the uber is exponentially easier to heil.
So much better than phoning some droll dispatcher for a slower service.
Licensed taxi operators used to do exactly same thing with a slower more expensive service.
If they were better Uber wouldn’t have sold 10 billion tickets in 2018.
Uber adjusts Taxi fares to supply of drivers and demand. Licensed taxi drivers restricted supply to charge the more for a worse service.
Uber can do this because they are a now a verb. Customers love Ubering and that’s all that matters.
If legislation changes to increase driver pay Uber will still have network, cost and brand advantages over it’s competitors in the growing taxi market.
Ignoring laws broke taxi cartels globally. I think that is forgiveable.
And they aren’t forcing anyone to drive Uber but uber does provide an low barrier autonomous employment option that never existed to millions of people. The fact this works in their favour is irrelevant because customers love Uber.
It’s not like there’s a training opportunity cost to driving uber. You use a car you have and know how to drive anyway and you drive it in your spare time or on a full time basis to deliver people or things. The cost to secure this employment is $30 for a police record check. Don’t even need to write a cover letter.
They mightn’t be the straightest company in the world but neither are taxi cartels so they had to go to the edge of the line to displace them for the greater good.
That’s a pretty cynical and inaccurate way of looking at it. They did create hundreds of thousands of part-time to full-time jobs which presumably did not benefit only the 1%. They did drastically lower the price of point-to-point transportation, thereby massively expanding the market for it which presumably did not benefit only the 1%. etc
But all of that was temporary. The jobs go away when Uber falls apart and the cheap point to point transport paid for by VCs is also gone. However the taxi companies that existed are now gone as they could not compete with Uber and the ones that could compete are working for less than before.
Whatever the companies/brands are, we'll still see app-dispatched taxis, at least until such time as door-to-door self-driving shows up--which IMO is going to be a very long time.
It's true that prices probably go up relative to where they are today which presumably reduces the demand and makes these services less viable in less dense locations.
The rides business is EBITDA profitable and very close to generally profitable. Uber may be valued too highly, but their core business is not going anywhere.
Uber is the ubiquitous word for modern transport between 1 to 40kms in the western world. Ubering is a verb.
Thats a whole lot of mindshare and Uber is a whole lot better than a taxi. Future demand for taxis will go up. Uber is the verb for the software layer in the middle of getting from a to b.
Nobody can innovate enough in the space to displace Uber’s brand lead. Running a server is cheaper than paying a dispatcher.
Like Coca cola there is an uber on every street corner of the western world and customers love uber. Uber doesn’t need to buy syrup or warehousing.
Sounds like an opportunity to buy a profitable brand that successfully invested in becoming a verb.
I wonder what would be the minimum support cost if you kept the brand going and outsourced the server tech support. And what would be the minimum number of developers required to update the app for drones and air taxis.
I reckon
100 x 250k development
2000 x 100k server support
10 x 200k design
1000 x 100k driver/customer liasion
Servers don’t know say 10,000 x .5k
Equals about 400m a year in operating costs.
If they are serving more than 400m rides a year and growing that should be a buy because every ride past 400m is pure profit and the only depreciation is their servers which is a minuscule percentage of their costs.
I’m going to read up on this company. It’s lower risk than Tesla because it only requires labour and the demand for getting from a to b is only going to increase. Lyft will never be a verb. Its definitely worth further investigation. I hope the shares sink further.
And has expertise in establishing brand prescence and marketshare.
Uber = better taxi and demand for taxis will increase in future with or without driverless cars.
How easy is it for car manufacturers or software companies to build and displace what Uber has in operation in the transition to driverless cars? I think it’s difficult.
Uber seems to have deep experience how this market will play out and they are actually spending the money on r&d to see how it will play out and should be able to position the Uber brand which everyone in the Western world associates with taxi to clip the ticket on an increasing number of taxi rides in the future.
Google and Apple are possibly the biggest threats but they have a whole lot of anti-trust, privacy and motivation issues to overcome. Possibly Tesla has a automotive technology edge but unlikely and Tesla is constrained by its capital intensive business model.
From a net cash flow perspective, clipping tickets on taxi rides seems a profitable growth business while R&D into driverless car tech is a bottomless well but if your the largest taxi ticketer in the world it’s probably good to be at the edge of this field of knowledge.
At $26.00 a share uber needs to clip $1.00 per ride on 2.4 billion trips to get 12* earnings.
It did 10 billion rides/deliveries in 2018 and has 12 billion cash on hand presently.
It is a software business and owns the copyright to it’s software stack so should have lower operating costs than it’s smaller competitors licensing bits and pieces of their stack plus economies of scale plus one focus on getting people and things from a to b as easily as possible.
I hope it goes lower. At 26.00 - 7.00 for the cash on hand you are paying 19.00 for a verb that sells 6 tickets per day at $1.00 profit per ticket equals a 30% return on the core business which is being invested into R&D to secure brand prescence and network effects in emerging delivery technology.
That R&D can stop today and Uber will continue to print and clip the ticket for 10 billion rides per year now and for the forseeable future.
So it’s just a question of whether the current manager is a genius at deploying capital into the driverless r&d space and can get dominant market share of air taxi’s and delivery because the core of Uber (10 billion tickets per year) is a fantastic business and that definitely didn’t happen by accident and with antitrust regulations the uber app should become more profitable and dominant.
Slightly tangential: Does anyone know how Uber was able to skirt Taxi regulation in the US? Did they actively lobby, or fight this in the courts? It's something that I've always been curious about, since this was a big problem for them in several European countries, and it's hard for me to imagine that in the US everybody just bought the "it's totally not a taxi" argument.
I'm not sure whether to interpret Uber's branching out into many different verticals (flying taxis, autonomy, food delivery, general logistics, scooters, payment etc) as an act of desperation or genius.
I feel they have too much money so they desperately try to branch out. Google is a Little similar. A ton of cool experiments but almost nothing turns into a real business.
It’s funny how Uber simultaneously says it’s all about supporting drivers and treating them like family, and at the same time they want to fire them all so that robots can do the driving.
You might want to wait for some sign of a turnaround before assuming this is the bottom of the dip. Usual disclaimer about taking investment advice from internet strangers applies.
It's a very common fallacy to think that previous stock price somehow indicates the future price. However, one should remember that whatever caused the price to fall in the first place, probably still exists, and unless remedied will continue to cause problems in the future. I like to buy stocks of companies that are in positive trend, reasonably valuated and have sound finances.
Any company supporting what you truly believe is good for this world instead of dumping $$$ with the sole purpose of making $$$ no matter the external costs. Sustainability, energy, education, medicine, the small business at the corner of your street &c. the world isn't running out of good companies.
i actually agree to that but companies are not available in the public market. Uber does provide some value for people but it's mostly a gambling game pumped by a temporary wave in economies. i think it s time for some serious work in biotech.
Uber moved from stock options to RSUs in December 2014. People who got RSUs are OK. Those that got options in late 2014 are probably the worst off but unsure what the strike price was for those.
Most people who joined in 2015 were getting RSUs and not options. Also, the strike price on options is dependent on the 409A valuation and not the valuation at which they raised money.
an acquaintance got recently hired to do CRUD there for half a mil total yearly. Sweet. And all that while making the world a better place, and sticking it to Saudis(Softbank) whose money seems to be the source of the compensation. I'm green with envy.
I am long on Uber: taxis are dead, it will not go anywhere. The only problem is that the board made a strategic mistake that felt good short term. They tried to retain users by pushing the founder out, and hiring a diversity CEO. This failed long term as any populist board move does. But they still have a chance to have their NeXT moment and bring Travis back.
At the current share price, no, it's probably not. It's the weak version of WeWork. The company is wildly overvalued based on growth expectations it can't possibly meet after a history of investor-driven mania. But the business model is solid. Pervasive gig-sourced drivers across the world with a universal interface is absolutely what the market wants.
Uber the company may be in trouble, but Uber the brand will be driving people around for decades to come.
They don't need Travis. They need an adult in charge who will shed about 80% of their payroll. Managing a cloud-based mobile logistics service for taxis shouldn't require 22,000 people.
For many purposes they seem to have automated/script-based customer service that requires little manpower.
I reported a bug in their app in a review I left on the Play Store. Uber responded saying to report it on their website instead. I did so, they told me it wasn't valid because I didn't include screenshots. (Even though there was a clear description of repro and expected/observed behaviour). After a few days I got around to sending them screenshots, and received an auto-reply that the issue had been closed and my reply rejected.
I'm not oppossed to frat bro culture tout court. As long as employees aren't being harmed and productivity is high, then the choice to work at a place with just such a culture is like the decision to choose to work anywhere. Pretty standard stuff.
However, people can mistake a frat bro culture with actually high productivity (leaving aside questions of whether employees are harmed by the culture). Zenefits pre-Parkers-leave might be an example. Employees can't be getting drunk and having sex in stairwells during office hours and retain a high level of productivity.
That's a rather strong claim. What's the causal relationship here? All frat bro cultures necessarily create lawbreaking and unethical behavior?
From my perspective, that would be prima facie wrong. I've witnessed frat bro cultures that led to that and ones that haven't. Just like every other type of culture.
The tech "bro culture" values being extremely aggressive, competitive, and ignoring norms of behavior. That sort of mindset leads directly to lawbreaking and unethical behavior.
Yeah, I think we might be talking about different things.
What I have in mind is a culture where personal boundaries are a bit relaxed, people are abnormally loud when communicating, etc. There is a sort of shallow resemblance to general sports culture.
I'll ignore whether or not it's morally sound to bring him back, since in the US putting reprehensible men in positions of leadership is par for the course these days. What moves would Travis make to attain profitability?
Remember that Steve Jobs helped Apple by killing a lot of products and simplifying their offerings. In the latest numbers release, rides were "profitable"; Uber Eats wasn't. I would agree that if Uber focused on the core product, and eliminated all the side projects, in the long run it would work best.
Not where I live. Where I live, taxis are beating the pants off of Uber and Lyft. This certainly isn't true everywhere, but it does show that taxis absolutely can compete with Uber and Lyft if they have their acts together.
This is how this was supposed to play out and everyone here (on HN) knew that. The only people suckered were public investors during the IPO roadshow.