Live Counter of Uber's Net Losses ($27B and Counting)

by tr3ntg • 4 years ago

107 149 4 years ago

rohitb91• 4 years ago

Ponzi scheme

I can see Uber (and many many tech companies) become profitable by significantly shrinking their tech and HQ workforce, removing driver/rider incentives and admit that the total addressable market is much smaller than they thought.

I think this is what will happen when interest rates go up and free money stops. Unfortunately, this will mean a lot of tech workers will lose their jobs and/or have their salaries decreased significantly.

pclmulqdq5• 4 years ago

If they do this, their stock will collapse. They are priced on future growth (which is already getting a lot less valuable), so if they admit there is a cap, they will start trading at a reasonable P/E ratio.

Edit: P/S ratio, not P/E ratio. Of course their P/E ratio is negative right now.

api• 4 years ago

It'll be interesting to see what happens when they end up with a viable business but one that is probably never going to return the crazy returns that were originally priced into the valuation.

There are tons and tons of these across all sectors left over from a prolonged era of incredibly cheap money.

rrdharan• 4 years ago

they will start trading at a reasonable P/E ratio

As in, a positive one?

senttoschool5• 4 years ago

If they do this, their stock will collapse.

The other option could be bankruptcy which would bring their stock to $0.

_ea1k5• 4 years ago

Isn't it currently about 2X P/S? That's not terrible in itself.

ceejayoz• 4 years ago

The first company to ditch driver incentives is likely to be the first to have folks going "huh, no drivers on service X available... I'll try service Y" and collapse.

JohnJamesRambo• 4 years ago

After reading your comment I had an image of a New York City cab driver and his medallion and the meter, him looking over his shoulder saying “Welcome back” as he hits the meter.

yrgulation3• 4 years ago

Uber is already bleeding drivers and customers in favour of Bolt in many markets. Also uber has become rife with scams. Bolt is not profitable either but it manages to keep people happy.

gonzo413• 4 years ago

When this happens, the amount of uber cars will probably decrease. So there'll actually be a shortage again the taxi market.

sva_2• 4 years ago

I sometimes wonder what Uber is even doing with their 30k employees.

A look at their blog[0] doesn't really give me much of an idea either, it all seems to be scattered, non-concentrated efforts into various directions.

[0] https://www.uber.com/en-DE/blog/

pid-12• 4 years ago

I'd guess a business like Uber must need legions of driver / customer support.

hdjjhhvvhga• 4 years ago

Unfortunately, this will mean a lot of tech workers will lose their jobs

As far as I can tell, Uber doesn't employ developers - you just have a chance to become their "technology partner". And while there are probably 3500 of them, once this pyramid scheme called Uber falls, many of these people will go elsewhere. The question is: will that be a bad thing? From the point of view of the total benefit to the society, it's probably better that they work on truly sustainable products.

phphphphp• 4 years ago

That's been the narrative for many years, though. The idea that "...they're unprofitable by choice in pursuit of growth..." is indistinguishable from a bad business model. Most locales already have Uber alternatives that are sustainable and have a better service quality, the only reason Uber has marketshare in these locales is because Uber is cheaper... due to the loss-making behaviours. If Uber removed their incentives, they'd immediately lose marketshare to the local competitors that are already sustainable. Uber is incentives, Uber is investor-subsidised transport.

dboreham3• 4 years ago

Most locales already have Uber alternatives that are sustainable and have a better service quality...

Based on my experience recently in Europe, this isn't the case.

rchaud2• 4 years ago

removing driver/rider incentives and admit that the total addressable market is much smaller than they thought. I think this is what will happen when interest rates go up and free money stops.

Ah, for the halcyon days of 2014 when we could blame high taxi fares on the low-tech bureaucrats running medallion rackets.

Uber and taxi fares are pretty much neck and neck these days. How much more could they cut driver compensation?

onlyrealcuzzo• 4 years ago

I think this is what will happen when interest rates go up and free money stops.

And what happens to pension funds if interest rates go up and stay up? What happens to government spending on debt as a percentage of tax revenues? What happens to personal debt service as a percentage of income?

The modern world isn't going to work with positive REAL interest rates. So I'm skeptical they're going to stick around for more than a year without causing a bigger depression than The Great Depression.

cs702• 4 years ago

Consider adding links to the 10-Q's and 10-K's, in case anyone wants to verify.

PaywallBuster• 4 years ago

Should do for other companies like Tesla

popular target for short sellers - numbers are getting better but depend on what numbers you looking at (FCF, net earnings, EBITa, etc)

edit: maybe the criticism is outdated, I'm not following too closely

abc_lisper• 4 years ago

Haha. How did Tesla lose money?

LanceJones• 4 years ago

Please… get specific and share the losses you speak of.

oogali• 4 years ago

The font should be red and the number prefixed with a hyphen.

bdsa• 4 years ago

Is a loss presented as -X a gain? (double negative)

smcl2• 4 years ago

I don't think people would interpret it that way, especially if it was red. But maybe surrounding the value in parentheses is a more unambiguous way to denote "this figure indicates a loss" but I'm not sure how well-known that is

stefan_• 4 years ago

If you are curious how they went from $496M in 2021 to already $8.5B in 2022 despite promising to accelerate their profitability even more, $7.3B of those appear to be from "revaluation of Uber’s Aurora, Grab, and Zomato stakes". That's still more losses, though.

makestuff• 4 years ago

Similar thing happened with Amazon and their investment in Rivian. Q4 last year was like a 10b gain and then by q1 of 2022 it was a loss.

jlmorton2• 4 years ago

They did indeed write down their investment in Rivian, but they still made a healthy 3x gain, just not 30x.

aardvarkr2• 4 years ago

This is especially useful context, thanks for sharing it!

viscanti• 4 years ago

Their promise to accelerate profitability was likely for their own operations and not their investments (where presumably they have much less control). $8.5B is a pretty big loss, but it might be unrelated to their actual business. That said, investors would be buying the operational business (still at a loss but EBIDTA profitable and seemingly making progress to overall profitability every quarter) and the Investment business (seems to continually lose money).

CobaltFire• 4 years ago

I imagine they are spending to push their numbers pretty hard right now; I regularly get 40% off of $25 coupons on UberEats that bring the delivered price down to below what I'd pay at the counter, not even counting gas and time to get there and back. That can't be sustainable, but I get the coupons faster than I spend them.

formvoltron• 4 years ago

Does this also take into account printing shares to give to employees and founders?

rogerkirkness2• 4 years ago

Tesla got lifetime cashflow positive after burning $6B in accumulated losses, and has now paid all of those back prompting investors to ask for stock buybacks.

Uber is just a terrible waste of capital to have an app company with an accumulated deficit almost five times as much as Tesla which makes cars.

4pkjai• 4 years ago

Tesla got lifetime cashflow positive after burning $6B in accumulated losses, and has now paid all of those back prompting investors to ask for stock buybacks.

Sorry to be dumb, but can you explain this sentence a bit further? What do you mean by "burning $6B in accumulated losses"?

rippercushions• 4 years ago

Tesla lost a total of $6B until it finally started making money. The tables turned in mid-2019 and every quarter since has been profitable.

aardvarkr2• 4 years ago

Not OP but I assume that’s what you get if you add up every quarterly loss from their financial disclosures.

rogerkirkness2• 4 years ago

Elon talks about it in the 2022 investor update [1] below.

It means that they burned $6B in total before becoming profitable and eventually paying it all back. So they are now lifetime profitable on a cash basis.

[1] https://www.youtube.com/watch?v=pnXy8c0GOpE

boh• 4 years ago

Uber was essentially a financial instrument for VC investors to pump and then dump on the public markets. It's main function was to produce creditability rather than be an actual business.

Workaccount2• 4 years ago

1.) Create incredibly useful company that the public mass adopts and uses.

2.) Fuel adoption by running in the red, subsidising consumer costs to keep prices low and fuel adoption.

3.) IPO and sucker all those consumers into buying shares in a company they know and love.

4.) Cash out and let the new shareholders figure out that the company isn't at all sustainable.

testfoobar• 4 years ago

Is this really true? How do you learn to classify when others are bull shitting you vs. when they're sincere? Specifically, how do you tell when a founder or investor is in it for a pump-and-dump vs actually trying to build a lasting business? Uber has built incredible tech, negotiated deals globally, become a vocabulary word (i.e. let's an get an uber.) Uber's engineering blog shows real complex ongoing projects.

Or to put in reddit terms: how do you know when you've joined a pump-n-dump business?

MontyCarloHall2• 4 years ago

I think this is an overly cynical take. I think the majority of Uber's investors (along with a surprisingly high fraction of the tech community) genuinely believed that self-driving cars were just a few years away, and so Uber's stated business model was viable: in the few years it takes to develop self-driving cars, sell rides at a massive loss to get customers accustomed to cheap taxi transportation and destroy existing taxi markets, and then switch customers who are now addicted to Ubering everywhere over to self-driving cars, thereby yielding absurd profit margins.

And to be fair, had self-driving cars indeed become commonplace by now (as many people ~10 years ago believed would have happened), Uber would rightly be one of the world’s most valuable companies.

axg112• 4 years ago

I largely agree with the take that Uber is an inefficient company, but I don't think Uber is as simple as "an app company". Uber's main challenge is people. They're basically one of the largest employers on Earth (est. ~4 million drivers). They operate across all regions. All of that adds complexity.

authpor• 4 years ago

however whether the people working through uber are considered uber's employees varies by jurisdiction.

so you should only count those drivers in jurdistiction where they've been clearly defined as Uber's employees

AlexandrB• 4 years ago

They're basically one of the largest employers on Earth (est. ~4 million drivers).

I thought Uber's line was that the drivers were independent contractors. By their own logic Uber only employs the engineers and support staff that actually work at Uber not the 4 million drivers.

Edit:

They operate across all regions. All of that adds complexity.

I thought the idea was that by operating in multiple regions Uber could leverage economies of scale and deliver ride-hailing services cheaper than traditional taxi companies. Is this hypothesis completely incorrect then?

rchaud2• 4 years ago

Uber's main challenge is people.

Correct. Which is exactly why they go to great lengths to reduce the power of the labour without which the company is a black hole of wasted capital.

artursapek• 4 years ago

How much runway do they have left? Will Uber ever hit a wall and just die?

mminer237• 4 years ago

My understanding is that they're able to keep operating by selling more stock and by paying officers in stock. Uber would die if the stock price drops enough that it can't get enough cash to keep operating through those things.

nebula88042• 4 years ago

So there is a Sword Of Damocles that could fall any time within the next year or so if the recession deepens?

jeffrallen• 4 years ago

I miss f'ed companies.

indymike• 4 years ago

One of the best dotcom era sites. I loved the comments.

davey48016• 4 years ago

I see Uber as a very expensive land grab for self driving taxis. Once self driving technology works, especially if multiple companies get it working around the same time, merging/integrating with Uber gets you into the app that everyone is already using to call a ride.

lm284692• 4 years ago

Once self driving technology works

Once ?

More like "if"

ghaff8• 4 years ago

The problem is even if/when you get to a reasonable facsimile of self-driving for easier conditions, e.g. highways in good weather, that does very little to get you door-to-door service in generally urban areas in most kinds of weather.

notahacker• 4 years ago

If self driving technology reaches the point where it can operate commercial taxi services legally and more cost-effectively than regular taxis, the people holding that collection of IP and licences won't need to spend $100bn on an app company to find customers.

yywwbbn4• 4 years ago

Except that Uber sold it’s self driving division so they are unlikely to be at the forefront of that transition. There is nothing special about their app/platform so they are unlikely to derive significant profits just from that.

tsimionescu• 4 years ago

People switch apps almost instantly once there is better service elsewhere. Nothing gets you searching for a new taxi app quicker than seeing a 10 minute wait for your Uber.

There is almost 0 stickiness to taxi apps like Uber or Bolt or Lyft or [...]

dboreham3• 4 years ago

Yeah that's not going to happen.

lm284692• 4 years ago

I only use uber when they send me 20-50% off coupons on uber eats.

Forever thankful for the rich investors feeding me on the cheap

gigaflop2• 4 years ago

Food tastes better when subsidized by VC millions/billions.

mamonster2• 4 years ago

Honestly think in 10-20 years (if we survive till then) we can tell our grandkids stories about how we basically got subsidized by VCs and sovereign wealth funds to enjoy Uber,DoorDash,Airbnb,etc deals due to ZIRP.

shubhamjain• 4 years ago

One must understand that "profit" isn't always as rosy as it may seem, and "loss" sometimes isn't as bad. A company can show a lot of profit, but digging deep you'll realize that most of it is stuck in receivables. This wasn't really a bad year for Uber, they became Cash Flow Positive for the first time [1]. The reason for their loss was valuation decline of its stake in Didi and Grab [2].

The loss was due almost entirely to revaluation of its stakes in Grab and Didi in Asia and autonomous driving technology enterprise Aurora in the United States, the earnings report said.

[1] https://auto.economictimes.indiatimes.com/news/aftermarket/u...

[2] https://gadgets360.com/apps/news/uber-net-loss-q1-2022-usd-6...

alexb_2• 4 years ago

As it turns out, if you ignore all of the ways it loses money, Uber makes money

yywwbbn4• 4 years ago

Berkshire Hathaway suffered an 30+ billion loss just because Apple’s stock price declined.

Neither company is losing money and both are highly cashflow positive.

malfist• 4 years ago

Man, I wish I could go to the gas station and tell the attendant I'm going to pay them what gas should be worth if you ignore all the shenanigans in the middle east.

CSMastermind• 4 years ago

If I understand OP correctly then Uber is in fact making money, they just have some depreciating assets on their books.

It's like if your net wealth went down this year because your 401k declined. That doesn't mean that you're broke or even poorly managing your finances.

You can have a positive cash flow (budgeting and living within your means) while still having your overall net worth decrease.

_ea1k5• 4 years ago

Its more like, ignoring the fact that they took in more $$ in revenue than they spent in expenses, they lost money.

Cash flow positive is an important milestone. Whether its sustainable is the real question.

graeme• 4 years ago

You’re mixing up stocks and flows. Uber had the equivalent of a worker in the following situation:

* their salary goes up. They can now cover all of their living expenses + save * the value of their stock portfolio goes down

Are they poorer? Yes, on paper. But they aren’t losing money, defined as their living expenses costing more than their salary. In terms of salary vs. expenses they are doin great

Buffett has long decried measuring business performance based on fluctuations in value of holdings

edf13• 4 years ago

Which makes this "live counter" pointless - as it is purely counting as if the losses are continuing at the same rate as the last n quarters

mamonster2• 4 years ago

The key caveat of their cash flow positivity though is stock-based compensation. It's a very complicated debate about how much one should actually care, but as an investor in equity the company being cash positive (on the basis of operating activities) due to dilution(because that is what stock-based comps entails) isn't cool.

Pulling the numbers from Bloomberg for Q2 2022: Cash from ops 439, stock-based comp 470.

z9znz• 4 years ago

The emporer still has no clothes. But as is the tech startup way, the investment round ponzi scheme has worked brilliantly. Pre-IPO investors got their profits and then passed the black hole to foolish stock market investors.

There are a lot of Uber defenders on HN. I suspect they are current or former employees or are people involved in other startups which play the same ponzi game.

Uber did do one thing well, and that was to create a modern and usually effective way for riders to get taxis on demand. Presumably (can't know as I'm not a driver) they also provided a good way for any driver to get riders.

But they've done so much so wrong... starting with willfully ignoring local regulations (which allowed them to charge less than legal taxis) and continuing with poor driver vetting and monitoring which has resulted in some terrible events occurring with drivers and passengers.

Uber should be held up as an example of how twisted capitalism has become and why regulation is often necessary and should have teeth when it exists.

The problem is that US politics is so dependent on and addicted to corporate finance that there is no incentive to fix this. It's more of the "as long as I cash out, I'll do things that are bad for the public". This is especially true when the people who write the laws are shareholders.

dmitriid4• 4 years ago

Pre-IPO investors got their profits and then passed the black hole to foolish stock market investors.

Funnily enough, in their IPO filing Uber said they might never be profitable. And still...

dmitriid4• 4 years ago

I've been telling people for years. All the HN darlings, all these amazing innovative unicorns, and Uber especially, only exist because of unlimited investor money and price dumping.

A while back I did a cursory search through YCombinators "most successful companies", and guess what: https://news.ycombinator.com/item?id=27485360 Hundreds of millions of dollars lost every year for years.

ghaff8• 4 years ago

Uber is mostly just the biggest example of how many people with disposable income will happily consume lots of services if they're priced well below what they cost to provide.

wussboy2• 4 years ago

That link didn’t work for me. But I would like to read it. Can you please confirm?

dmitriid4• 4 years ago

Hmm. Worked for me.

If it continues to not work, here's a screenshot: https://imgur.com/a/zwgMhzR

dboreham3• 4 years ago

AirBnB seems to be a counterexample. Ever-rising fees, but it's still pretty much the only show in town if you want a non-hotel experience.

dmitriid4• 4 years ago

According to this: https://www.businessofapps.com/data/airbnb-statistics/ AirBnB has not had a single profitable year, losing 4.5 billion dollars in 2020 (okay, it was the pandemic year).

How is it a counter example?

axg112• 4 years ago

Is there anything like this for a wider basket of (tech) companies?

beAbU• 4 years ago

~$30B of the wealthiest people's money that's redistributed to the masses.

Bravo!

karussell• 4 years ago

If you dig into the numbers of the taxi market you'll learn that this market had very low margins even before Uber "disrupted" it (certain local markets excluded). Good for me that I realized this before I focussed on this "obvious" and tempting market with my own company.

The only real disruption Uber delivered was that it got rid of the employees every taxi company has and convinced many people that driving for them is a win (although often this is not true, if you consider all expenses).

Certainly there is some small efficiency gains through the app and disrupting some nonsense regulations (e.g. here in Germany a taxi has to return to its station before it can pick up a new passenger). But the major part is the employee trick.

Maybe they bet on the self-driving cars, but they sold ATG and so this can't be part of their plan.

ghaff8• 4 years ago

It was obvious for years that:

1.) Self-driving, especially to the degree necessary for a taxi service, was never going to happen in a timeframe that was economically interesting for Uber and

2.) Prices were always going to have to end up in the ballpark of taxis and private car services to be profitable--with everything that implies for the size of market/network

3.) Uber did offer a better experience than many existing taxi companies but that wasn't really a material moat and taxis now widely offer apps

_ea1k5• 4 years ago

Numbers like this should really be based on cash flow. I'm sure it'd still be negative, but the rate of change would be different.

fairity• 4 years ago

This comment thread is a case study in confirmation bias. People are looking for data to support their belief that VC-backed tech businesses endlessly light cash on fire. And, refuse to dig a layer deeper to get to the truth, which is that Uber is currently already a fundamentally profitable business.

Uber's free cash flow was +$672m and +$382m in the last two quarters. The reason they reported negative income was due to huge write downs in past investments.

For all those who have been flabbergasted by Uber's propensity to burn cash, the last two quarters are an opportunity to learn a lesson in business, if you're up for it.

LatteLazy• 4 years ago

The losses are primarily due to it writing off equity investments in food apps and self driving cars. It made a profit as recently as Q4 2022. Revenue (a much harder number to manipulate than profit) has been growing rapidly.

https://www.globaldata.com/data-insights/technology--media-a....

dncornholio• 4 years ago

How this company cannot make money is beyond me. Surely developer accounts on Apple and Android can't be this expensive right? Billing is easy as all the drivers are freelancing. You could easily run this service with only a few teams.

joshe2• 4 years ago

It's funny how angsty 2018 era San Francisco was about ride sharing. Everyone thought it was "big tech is crushing the world", when really it was "vc's and endowments are going to subsidize your rides for 10 years because they are terrified of missing out". Thanks Yale!

Rides were $5 cross town in SF. Those losses? They are still subsidizing them, just by less.

mola4• 4 years ago

Subsidizing your rides while corrupting your democracy by pooring endless cash into lobying against worker rights... It's a pretty heavy price.

joshe2• 4 years ago

Another big myth is that money is stopping all your ideas from being accepted. The truth is that you haven't convinced people.

This is true even for entirely correct ideas.

None of those were going to pass anyway, so it's no price at all.

singularity2001• 4 years ago

As much as I dislike Uber, $27B is nothing if it succeeds in monopolizing any aspect of transportation.

alexb_2• 4 years ago

Is it monopolizing transportation, or is it monopolizing driver/rider incentives?

Live Counter of Uber's Net Losses ($27B and Counting)

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