People here seem to think that Uber/Lyft do not have any competitive moat. I disagree. What we seem to forget is that just because a VC can burn boatloads of money to capture ridesharing market from Uber/Lyft doesn't mean that they would. From a game theoretic POV, Uber and Lyft have signaled that they're ready to fight for survival in markets they are established in. Unless as a startup founder you can demonstrate that you can achieve lower cost structures than Uber/Lyft, no VC will fund their rapid growth (small offerings will still find a niche, assuming they don't get gobbled up). Uber/Lyft do have a VCs-will-not-race-to-the-bottom-with-them moat, and tomorrow they might as well raise their prices to turn profitable. Their biggest challenge is Waymo and SDC because if a competitor as significantly lower cost structure, all bets are off.
> no VC will fund their rapid growth (small offerings will still find a niche, assuming they don't get gobbled up
And yet Grab and Didi drove Uber out of South East Asia and China, Ola is giving Uber a run for its money in India and now GoJek in turn is challenging Grab. In my recent trip to Tokyo we were mostly advised to take regular cabs Vs Uber in contrast to a year ago. That's literally half the world where they're getting out competed.
When reasoning doesn't line up with facts, there are usually flaws in the logic. One possible flaw it turns out is that well off globe trotters or even people who frequently travel across cities in a country and would love to use the same app everywhere likely form a small % of total cab trips. Majority of trips are just local trips by an area's residents. So locally, majority just goes with whoever offers better service and relevance. Cutting Price can trump over these but by going public, bottom line became a lot more important to Uber and Lyft - so this isn't likely a viable strategy. Another possible flaw is that the compute required to support this is likely commoditized and there's not likely as much competitive advantage in data.
Startups won't win this. Manufacturers will. They have brand, cars, and soon can license the self driving tech. How hard is it for a billion dollar company to roll out a ride hailing app? Think about where that leaves Uber. They have to buy the cars from said manufacturers. This already gives them a significantly larger cost base and let's face it, while they also have a brand it is no more powerful a draw than Mercedes or Toyota.
Ubers problem is that it needs to compete locally: https://thinkgrowth.org/uber-is-going-to-0-and-benchmark-kno... . A taxi company does not need to challenge Uber globally to compete with it in any given city - because most taxi rides are from local population. This is different from AirBnB - where the customers need something that can be trusted globally.
so, as long as investors have appetite to lose money to buy market share? you are, of course, right.
But the business cycle goes up, and the business cycle goes down. (I mean, the general trend is upwards, but if you don't think there will be big downturns inbetween, well...)
The problem is that yes, uber and lyft have dominance for as long as they are willing to run the business for less money than anyone else; This puts a pretty hard cap on how profitable they can be.
(I mean, for an example of a competitor who might be willing to do it for very little over break-even, I've talked with several people who would be interested in setting up a competitor that was operated as a driver's cooperative. I mean, even that isn't workable when uber and lift are losing money, but it would work at profit levels that uber and lyft would consider break-even; such a cooperative could work really well as a break-even business, while investors in both uber and lyft would be super disappointed with a break-even business)
Compounding this, the ridesharing space is one that is massively price sensitive. Uber and lyft are so cheap that I've gotten rid of my car, and I use them all the time.
But if they raise their rates significantly? I'm gonna go buy a honda and drive myself; They get to duke it out for driving me around when I'm drunk, but we're talking less than 5% of my rides.
They can be fought in local markets via regulation and specialization. Global brand is expensive, a long-term liability in local politics, and doesn't get them that much in local markets because it is so easy for both drivers and customers to use multiple apps.
It’s not that Uber can’t be self-sustaining. The problem is that’s not enough to justify their insane valuation.
They titillated investors with tales about autonomous vehicles leading to skyrocketing profits. But now the hype over autonomous vehicles has faded, and it seems unlikely that fully autonomous cars will be mainstream any time soon.
$100B+ for unprofitable ride shares and lukewarm burrito delivery? If you say so.
You don't need people to make that point, Uber agrees to it too:
The personal mobility, meal delivery, and logistics industries are highly competitive, with well-established and low-cost alternatives that have been available for decades, low barriers to entry, low switching costs, and well-capitalized competitors in nearly every major geographic region. If we are unable to compete effectively in these industries, our business and financial prospects would be adversely impacted.
They don't have to be outcompeted by another similar entity, though. Their pie could get eaten by lots of small local operators, or by someone like Google with a fleet of self-driving cars.
"Uber/Lyft do have a VCs-will-not-race-to-the-bottom-with-them moat, and tomorrow they might as well raise their prices to turn profitable."
That's the multi billion $ question, if they hike prices to become profitable, will customers swallow it, or jump to local alternatives. My feeling is the latter, I don't think you get economy of scale for running a taxi business, because your biggest cost is paying local drivers.
- Expected to be teh largest IPO this year in the US.
- 10th largest all time
- trying to raise around $10B
- 2018 Year Ended Revenue $11.27 billion
- 2018 Year Ended Net Income $997 million
- 2017 Year End lost $4.03 billion.
- 10 billion trips in September 2018, up from 5 billion in September 2017
- Gross Bookings From Ridesharing $41.5 billion in 2018
- Revenue From Ridesharing Products $9.2 Billion in 2018
- List under UBER, good ticker!!
- 29 banks listed as underwriting the IPO, for those of you wondering, yes that is alot. Like 20+ more than a typical IPO.
From Bloomberg:
- 2018, Uber's operating loss totaled $3.03 billion, however it technically turned a profit in 2018, generating $997 million in net income. That's thanks to a $5 billion "other income" benefit.
Other Income is defined as:
- Interest income, which consists primarily of interest earned on our cash and cash equivalents and restricted cash and cash equivalents.
- Gain on divestitures, which consists of gain on sale of divested operations.
- Unrealized gain on investments, which consists primarily of gains from fair value adjustments relating to our investments such as our investment in Didi.
- Foreign currency exchange gains (losses), net, which consist primarily of remeasurement of transactions and monetary assets and liabilities denominated in currencies other than the functional currency at the end of the period.
- Change in fair value of embedded derivatives, which consists primarily of gains and losses on embedded derivatives related to our Convertible Notes.
- Other, which consists primarily of changes in the fair value of warrants and income from forfeitures of warrants.
- Lyft now at $61/share, ouch, there just is no other way to put it. THey pulled a lot of financial engineering tricks to boost their IPO price and well the results speak for themselves:(
Biggest Surprise to me:
- Uber Eats comes in at $165 million for Q4, for comparison Ride sharing generated a total of $2.5B in net revenue, the rest being ride sharing.
- So Uber is not really all that diversified in terms of ride sharing vs other, they are essentially Lyft in more markets.
> Lyft now at $61/share, ouch, there just is no other way to put it. THey pulled a lot of financial engineering tricks to boost their IPO price and well the results speak for themselves:(
I don't understand why this is seen as a negative. An IPO is a share issuance — the higher the price per share, the more money they receive in exchange for the same percentage of the company. Post-IPO "pops" represent money left on the table, effectively a transfer to the high-dollar investors with connections to the underwriter who can buy at the issue price.
Uber Eats revenue in 2018 is $1.46B which is pretty impressive
regarding other income:
> Gain on divestitures increased by $3.2 billion from 2017 to 2018. This increase was due to gains on the divestitures of our Russia/CIS and Southeast Asia operations.
Covered on page 85, basically spinoffs with other regional leaders
One thought about your ticker comment - I actually prefer it when the ticker is NOT exact same as the company like UBER or LYFT. This is because I know when I google AMZN, AAPL, TSLA etc. the search engine knows I want the stock price and am specifically asking about stock. For UBER and LYFT I have to type something like ‘LYFT stock’ if I want the price, trends and news around that.
- The whole calculation around "Other Income" are nothing short of financial engineering to show bottom line profitability.
- 24% of Uber's gross bookings come from 5 cities - Los Angeles, New York City, and the San Francisco Bay Area in the United States; London in the United Kingdom; and São Paulo in Brazil
- 15% rides started or were completed at an airport.
"- Lyft now at $61/share, ouch, there just is no other way to put it. THey pulled a lot of financial engineering tricks to boost their IPO price and well the results speak for themselves:("
Seems they priced it perfectly, extracted maximum value for their investors and left nothing to gain for the public.
When considering 2018 you really need to ignore the 4.9B in other income. The vast majority of that was a one time event, and then the next largest line item is unrealized gains. Not sure what the gains were on but likely something not very liquid and volatile, e.g. a start up.
It's basically a 4B loss for 2018. The numbers all around are just unreal.
I’m curious about their Treasury department. How do they manage the float bet. when users pay and when drivers are paid? How do they manage FX? A sharp treasury team is quite an asset.
So...
Step one, raise funding to run a revolutionary company.
Step two, ditch original idea for being revolutionary once funding is obtained. Use interest bearing bonds and other investments.
Step three, profit.
Feels more like Uber and Lyft reached a point where they cannot raise private capital anymore and so jumped onto the public markets to fool random investors. If they cannot be profitable now, what makes them think they will be profitable with SDCs?
I challenge the fundamental premise that SDCs will make them profitable. There is no stickiness to their business model. Moving on to another ride sharing service is frictionless today. Most people I know use both Lyft and Uber. So if tomorrow SDCs become popular and offer a cheaper rate, people will move to them in droves. Nothing stopping them. We know Uber and Lyft are way behind on SDCs compared to Google on that front. It also looks like GM and Ford could there before these two. So what makes them a good investment either in the short or long term?
Uber won't survive the wait for self driving cars, it's simply to far way, even if we take the most optimistic estimates. Uber is burning cash they do not have, trying to make self driving cars work. People seems focused on how much revenue Uber has, but Uber doesn't need revenue, they need profit to finance their R&D.
After the IPO I'd give it a year before the investors starts to demand slashing drivers pay, and cancelling the self driving car project.
The cost of entry into this space is much greater than I think most people realize. It's not "building an app". It's building a balanced, efficient marketplace.
This means complex matching, pricing and routing algorithms that have been developed for almost a decade. It's also about working with regulations at the city level and building a reliable labor force of contractors to supply the marketplace in every new city before the launch date.
There is so many experiments and tweaks to ensure that both supply and demand side remain properly incentivized, not to mentioned fighting deeply entrenched Taxi companies from city to city, that I'm surprised Uber and Lyft have gone to IPO so quickly, other than for cash raising.
The quarterly revenue data is more worrying - December Quarter 2018 was up only 22% over the previous year. (Page 121)
On Page 126 we see that even that revenue increase was subsidised by excess driver incentives, and netting that out the growth was only 17% year on year.
They have tightened things and their adjusted yearly EBITDA loss fell by $800m to $1.65 billion, but has this come at the expense of growth? Or has the growth simply become too expensive to chase? Or are electric mobility devices taking away the shorter distance rides?
And they had a loss of $890 million in the last quarter, and it's hard to see tangible evidence of margin improvement. (P128)
A valuation today of, say, $100 million needs to have net income of, say, $10 billion to be a very real probability relatively soon, or of one much larger later.
At, say, a 20% net margin and 40% growth $10 billion income would take 5 years. But that is a courageous assumption about the growth rate, given the above, and it also assumes significant margin improvement, which will be hard if the marketing spend continues, which itself is required for growth. And pricing is hard because increased prices simply move customers onto other platforms. This is not a winner take all market.
For the model to work Uber Eats growth needs to be maintained for a while, and that's possibility, although I suspect their margins will be sharply squeezed as big brand chains respond. (e.g with Mobi2Go and 3rd party delivery agencies they can roll their own)
Interesting S-1. I was actually kinda bearish on Uber in terms of scale for future growth/profit opportunities, compared to Lyft, but now I feel like Uber has the upper hand.
Yes, profitability is a big piece, but Uber is more diversified, in that they have other rev streams - Food Delivery and Freight, which they are ramping up (Focused on growth for now).
Also, by way of partnerships/equity, they have stakes in a lot of different market leaders in other markets/geographies. These companies are further diversified in terms of other rev streams (payments, commerce, food delivery etc).
Not sure how much of that is captured in the valuation.
SDCs (L5) are definitely a ways off in terms of becoming ubiquitous. Companies are doing fixed route or city/geo-fenced testing and for any of these companies to actually get to Uber's scale will take a long time and maybe Uber can acquire/partner with one/more of these before that happens.
Also, if we consider ride sharing as a commodity, Uber benefits from economies of scale as opposed to other competitors who may operate in smaller regions/markets so that's also going in their favor.
All of this is to say, they are definitely focusing on growth for now (which there is a lot of opportunity for), but at a certain point they could probably start becoming profitable by either reducing costs or ramping up prices (in tiny percentages) and still be better than the alternative.
We have incurred significant losses since inception, including in the United States and other major markets. We expect our operating expenses to increase significantly in the foreseeable future, and we may not achieve profitability.
Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.
If we are unable to attract or maintain a critical mass of Drivers, consumers, restaurants, shippers, and carriers, whether as a result of competition or other factors, our platform will become less appealing to platform users.
We may fail to develop and successfully commercialize autonomous vehicle technologies and expect that our competitors will develop such technologies before us, and such technologies may fail to perform as expected, or may be inferior to those developed by our competitors.
Just a brief scan and it looks much healthier and diversified than Lyft. Of course far from a perfect business or anything.
Their revenue is 5X Lyft's revenue. Doesn't look good for Lyft's stock to be honest.
I wouldn't be surprised if after their first earnings release, Lyft stock goes below 40 USD.
Horrible numbers! They cannot get the unit economics to work. In order to make up for that fundamental flaw, they are trying to throw a number of things at the wall(UberEats/UberFrieght/SD/Bikes/etc) and see if something sticks. Each of those other bets seems poor, thus far.
They better focus on getting their original business in shape(call a cab via an app). I would be curious to know if they tried to raise prices in any markets and what the results were. I'm sure they want to know this for themselves and their investors thus far. Has anyone seen data/insights into such experiments by Uber/Lyft/Ola/X/Y/Z?
Given that none of the ride-sharing companies are sharing insights on such experiments, I am going to conservatively assume that these companies have low/no confidence that they can raise prices. Network effects make a good moat. But demand elasticity, substitute products, and competition seem to be dominating over the network effects.
Their original business is a good one. Price and value are way out of sync. UBER at $100-120B is way overvalued. Not touching UBER/LYFT stocks with a long pole at these valuations. Overpriced by 3-4x in my view. When they fall by 70-80%, will buy some.
1. Humans aren't gonna trust SDCs easily. The way I look at it, SDCs would be used only to transport freight for a few years before people can trust it enough for ride sharing. I personally believe that companies should focus on self-driving trucking rather than self-driving cars and pivot into ride sharing after a few years of successful freight transport. People would trust the leader in the self-driving truck industry more than a top-notch but unproven tech company. Let alone cars, as simple as elevators in the buildings were operated by actual people before becoming completely autonomous.
2. Uber is not just in the USA. SDCs aren't gonna be approved everywhere, even after it becomes legal in the USA. Uber still has access to that market, but Waymo magically can't.
> The Company has from time to time issued nonrecourse loans to certain employees for the exercise of stock options or for personal use. As of December 31, 2017 and 2018, the total outstanding employee loan balances were $21 million and $16 million, respectively. A total of 16 million and 10 million shares were pledged as collateral to secure the loans as of December 31, 2017 and 2018, respectively.
Is loaning 20 million dollars to employees for personal use as dodgy as it sounds?
Some people are excited about Uber having a more diversified business than Lyft. Uber Freight, Uber Eats, Jump bikes and e scooters are some of their offerings. However, currently the revenue they generate (or don't) is completely dwarfed by the ride hailing service. If at some point in the future these other businesses turn out to be profitable, shareholders will insist to break them out of Uber to maximize gains. Ride hailing absolutely has to be profitable for Uber to succeed post IPO. At least for the foreseeable future Uber is exactly Lyft with minor garnishing.
I wonder if anyone reading through this filing could speculate: Can Uber just raise their prices to reach profitability? If they lost $3B on $44.1B of Gross Bookings, it seems they could raise their prices by about 7% to hit breakeven. Would they really lose that much market share if they did that?
The trend in their Core Platform Contribution Margin ("a useful indicator of the economics of our Core Platform", essentially ignoring all the costs apart from payments to drivers and restaurants) is not very uplifting:
"We also expect our Core Platform Contribution Margin to decline in the near term due to, among other factors, competition in Ridesharing and planned significant investments in Uber Eats, based upon our long-term growth expectations for Uber Eats. Our Uber Eats Take Rate has declined in recent periods, and may continue to decline, as we onboard large-volume restaurants at a lower service fee and restaurants with lower average basket sizes, and as we invest in more nascent and competitive markets, such as India."
I'm not an Uber-hater - but they don't offer anything unique and the valuation is insane.
Their problem is that if they rack up prices/commission to pay off their investors, then both their drivers and riders will simply switch to the next pre-IPO company that will connect them for less.
Uber in my mind is like all the other social media sites. We appreciate that they're the best thing to connect us at this time - but if something better comes along, both sides have no loyalty and will move on.
Can anybody imagine an Uber provider/rider they've met paying over the odds for an identical service because "they love the Uber brand"?
[+] [-] ManishR|7 years ago|reply
[+] [-] sfifs|7 years ago|reply
And yet Grab and Didi drove Uber out of South East Asia and China, Ola is giving Uber a run for its money in India and now GoJek in turn is challenging Grab. In my recent trip to Tokyo we were mostly advised to take regular cabs Vs Uber in contrast to a year ago. That's literally half the world where they're getting out competed.
When reasoning doesn't line up with facts, there are usually flaws in the logic. One possible flaw it turns out is that well off globe trotters or even people who frequently travel across cities in a country and would love to use the same app everywhere likely form a small % of total cab trips. Majority of trips are just local trips by an area's residents. So locally, majority just goes with whoever offers better service and relevance. Cutting Price can trump over these but by going public, bottom line became a lot more important to Uber and Lyft - so this isn't likely a viable strategy. Another possible flaw is that the compute required to support this is likely commoditized and there's not likely as much competitive advantage in data.
So it's going to be interesting...
[+] [-] tsycho|7 years ago|reply
UPDATE: Got it, self driving cars. I am not deleting the comment in case others were confused as well.
[+] [-] rorykoehler|7 years ago|reply
[+] [-] zby|7 years ago|reply
[+] [-] lsc|7 years ago|reply
But the business cycle goes up, and the business cycle goes down. (I mean, the general trend is upwards, but if you don't think there will be big downturns inbetween, well...)
The problem is that yes, uber and lyft have dominance for as long as they are willing to run the business for less money than anyone else; This puts a pretty hard cap on how profitable they can be.
(I mean, for an example of a competitor who might be willing to do it for very little over break-even, I've talked with several people who would be interested in setting up a competitor that was operated as a driver's cooperative. I mean, even that isn't workable when uber and lift are losing money, but it would work at profit levels that uber and lyft would consider break-even; such a cooperative could work really well as a break-even business, while investors in both uber and lyft would be super disappointed with a break-even business)
Compounding this, the ridesharing space is one that is massively price sensitive. Uber and lyft are so cheap that I've gotten rid of my car, and I use them all the time.
But if they raise their rates significantly? I'm gonna go buy a honda and drive myself; They get to duke it out for driving me around when I'm drunk, but we're talking less than 5% of my rides.
I suspect I'm not super unusual in this regard.
[+] [-] nabla9|7 years ago|reply
And fight they have, because they don't have a moat. A moat is a competitive advantage that is _cost_effective_ to defend. Uber/Lyft don't have that.
[+] [-] evrydayhustling|7 years ago|reply
[+] [-] freyir|7 years ago|reply
They titillated investors with tales about autonomous vehicles leading to skyrocketing profits. But now the hype over autonomous vehicles has faded, and it seems unlikely that fully autonomous cars will be mainstream any time soon.
$100B+ for unprofitable ride shares and lukewarm burrito delivery? If you say so.
[+] [-] empath75|7 years ago|reply
[+] [-] thisisit|7 years ago|reply
The personal mobility, meal delivery, and logistics industries are highly competitive, with well-established and low-cost alternatives that have been available for decades, low barriers to entry, low switching costs, and well-capitalized competitors in nearly every major geographic region. If we are unable to compete effectively in these industries, our business and financial prospects would be adversely impacted.
[+] [-] benburleson|7 years ago|reply
[+] [-] m1sta_|7 years ago|reply
[+] [-] lordnacho|7 years ago|reply
[+] [-] walrus1066|7 years ago|reply
That's the multi billion $ question, if they hike prices to become profitable, will customers swallow it, or jump to local alternatives. My feeling is the latter, I don't think you get economy of scale for running a taxi business, because your biggest cost is paying local drivers.
[+] [-] chollida1|7 years ago|reply
- Expected to be teh largest IPO this year in the US.
- 10th largest all time
- trying to raise around $10B
- 2018 Year Ended Revenue $11.27 billion
- 2018 Year Ended Net Income $997 million
- 2017 Year End lost $4.03 billion.
- 10 billion trips in September 2018, up from 5 billion in September 2017
- Gross Bookings From Ridesharing $41.5 billion in 2018
- Revenue From Ridesharing Products $9.2 Billion in 2018
- List under UBER, good ticker!!
- 29 banks listed as underwriting the IPO, for those of you wondering, yes that is alot. Like 20+ more than a typical IPO.
From Bloomberg:
- 2018, Uber's operating loss totaled $3.03 billion, however it technically turned a profit in 2018, generating $997 million in net income. That's thanks to a $5 billion "other income" benefit.
Other Income is defined as:
- Interest income, which consists primarily of interest earned on our cash and cash equivalents and restricted cash and cash equivalents.
- Gain on divestitures, which consists of gain on sale of divested operations.
- Unrealized gain on investments, which consists primarily of gains from fair value adjustments relating to our investments such as our investment in Didi.
- Foreign currency exchange gains (losses), net, which consist primarily of remeasurement of transactions and monetary assets and liabilities denominated in currencies other than the functional currency at the end of the period.
- Change in fair value of embedded derivatives, which consists primarily of gains and losses on embedded derivatives related to our Convertible Notes.
- Other, which consists primarily of changes in the fair value of warrants and income from forfeitures of warrants.
- Lyft now at $61/share, ouch, there just is no other way to put it. THey pulled a lot of financial engineering tricks to boost their IPO price and well the results speak for themselves:(
Biggest Surprise to me:
- Uber Eats comes in at $165 million for Q4, for comparison Ride sharing generated a total of $2.5B in net revenue, the rest being ride sharing.
- So Uber is not really all that diversified in terms of ride sharing vs other, they are essentially Lyft in more markets.
[+] [-] rory096|7 years ago|reply
I don't understand why this is seen as a negative. An IPO is a share issuance — the higher the price per share, the more money they receive in exchange for the same percentage of the company. Post-IPO "pops" represent money left on the table, effectively a transfer to the high-dollar investors with connections to the underwriter who can buy at the issue price.
[+] [-] buryat|7 years ago|reply
regarding other income: > Gain on divestitures increased by $3.2 billion from 2017 to 2018. This increase was due to gains on the divestitures of our Russia/CIS and Southeast Asia operations.
Covered on page 85, basically spinoffs with other regional leaders
[+] [-] SOLAR_FIELDS|7 years ago|reply
[+] [-] thisisit|7 years ago|reply
- The whole calculation around "Other Income" are nothing short of financial engineering to show bottom line profitability.
- 24% of Uber's gross bookings come from 5 cities - Los Angeles, New York City, and the San Francisco Bay Area in the United States; London in the United Kingdom; and São Paulo in Brazil
- 15% rides started or were completed at an airport.
[+] [-] zone411|7 years ago|reply
[+] [-] maxxxxx|7 years ago|reply
Seems they priced it perfectly, extracted maximum value for their investors and left nothing to gain for the public.
[+] [-] cartsagis|7 years ago|reply
[+] [-] pastor_elm|7 years ago|reply
You make it sound like they had 10 billion trips in that month alone. It is 10 billion by September 2018
[+] [-] brentm|7 years ago|reply
It's basically a 4B loss for 2018. The numbers all around are just unreal.
[+] [-] granzymes|7 years ago|reply
[+] [-] alteria|7 years ago|reply
Could you elaborate? Interested in knowing more
[+] [-] jpster|7 years ago|reply
[+] [-] agumonkey|7 years ago|reply
https://webcache.googleusercontent.com/search?q=cache:https:... [gcache]
[+] [-] rayiner|7 years ago|reply
[+] [-] Not_a_pizza|7 years ago|reply
[+] [-] yalogin|7 years ago|reply
I challenge the fundamental premise that SDCs will make them profitable. There is no stickiness to their business model. Moving on to another ride sharing service is frictionless today. Most people I know use both Lyft and Uber. So if tomorrow SDCs become popular and offer a cheaper rate, people will move to them in droves. Nothing stopping them. We know Uber and Lyft are way behind on SDCs compared to Google on that front. It also looks like GM and Ford could there before these two. So what makes them a good investment either in the short or long term?
[+] [-] mrweasel|7 years ago|reply
After the IPO I'd give it a year before the investors starts to demand slashing drivers pay, and cancelling the self driving car project.
[+] [-] tom-_-|7 years ago|reply
This means complex matching, pricing and routing algorithms that have been developed for almost a decade. It's also about working with regulations at the city level and building a reliable labor force of contractors to supply the marketplace in every new city before the launch date.
There is so many experiments and tweaks to ensure that both supply and demand side remain properly incentivized, not to mentioned fighting deeply entrenched Taxi companies from city to city, that I'm surprised Uber and Lyft have gone to IPO so quickly, other than for cash raising.
[+] [-] lancewiggs|7 years ago|reply
2016-7: 100% revenue growth, 105% trips, 51% MAPC 2017-8: 40% revenue growth, 40% trips, 33% MAPC (MAPC = active users)
These are sharp drops in the growth rate.
The quarterly revenue data is more worrying - December Quarter 2018 was up only 22% over the previous year. (Page 121) On Page 126 we see that even that revenue increase was subsidised by excess driver incentives, and netting that out the growth was only 17% year on year.
They have tightened things and their adjusted yearly EBITDA loss fell by $800m to $1.65 billion, but has this come at the expense of growth? Or has the growth simply become too expensive to chase? Or are electric mobility devices taking away the shorter distance rides?
And they had a loss of $890 million in the last quarter, and it's hard to see tangible evidence of margin improvement. (P128)
A valuation today of, say, $100 million needs to have net income of, say, $10 billion to be a very real probability relatively soon, or of one much larger later.
At, say, a 20% net margin and 40% growth $10 billion income would take 5 years. But that is a courageous assumption about the growth rate, given the above, and it also assumes significant margin improvement, which will be hard if the marketing spend continues, which itself is required for growth. And pricing is hard because increased prices simply move customers onto other platforms. This is not a winner take all market.
For the model to work Uber Eats growth needs to be maintained for a while, and that's possibility, although I suspect their margins will be sharply squeezed as big brand chains respond. (e.g with Mobi2Go and 3rd party delivery agencies they can roll their own)
[+] [-] an4rchy|7 years ago|reply
Yes, profitability is a big piece, but Uber is more diversified, in that they have other rev streams - Food Delivery and Freight, which they are ramping up (Focused on growth for now).
Also, by way of partnerships/equity, they have stakes in a lot of different market leaders in other markets/geographies. These companies are further diversified in terms of other rev streams (payments, commerce, food delivery etc).
Not sure how much of that is captured in the valuation.
SDCs (L5) are definitely a ways off in terms of becoming ubiquitous. Companies are doing fixed route or city/geo-fenced testing and for any of these companies to actually get to Uber's scale will take a long time and maybe Uber can acquire/partner with one/more of these before that happens.
Also, if we consider ride sharing as a commodity, Uber benefits from economies of scale as opposed to other competitors who may operate in smaller regions/markets so that's also going in their favor.
All of this is to say, they are definitely focusing on growth for now (which there is a lot of opportunity for), but at a certain point they could probably start becoming profitable by either reducing costs or ramping up prices (in tiny percentages) and still be better than the alternative.
[+] [-] datdata|7 years ago|reply
We have incurred significant losses since inception, including in the United States and other major markets. We expect our operating expenses to increase significantly in the foreseeable future, and we may not achieve profitability.
Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.
If we are unable to attract or maintain a critical mass of Drivers, consumers, restaurants, shippers, and carriers, whether as a result of competition or other factors, our platform will become less appealing to platform users.
We may fail to develop and successfully commercialize autonomous vehicle technologies and expect that our competitors will develop such technologies before us, and such technologies may fail to perform as expected, or may be inferior to those developed by our competitors.
[+] [-] whoisjuan|7 years ago|reply
I wouldn't be surprised if after their first earnings release, Lyft stock goes below 40 USD.
[+] [-] simonw|7 years ago|reply
[+] [-] mckenna|7 years ago|reply
They better focus on getting their original business in shape(call a cab via an app). I would be curious to know if they tried to raise prices in any markets and what the results were. I'm sure they want to know this for themselves and their investors thus far. Has anyone seen data/insights into such experiments by Uber/Lyft/Ola/X/Y/Z?
Given that none of the ride-sharing companies are sharing insights on such experiments, I am going to conservatively assume that these companies have low/no confidence that they can raise prices. Network effects make a good moat. But demand elasticity, substitute products, and competition seem to be dominating over the network effects.
Their original business is a good one. Price and value are way out of sync. UBER at $100-120B is way overvalued. Not touching UBER/LYFT stocks with a long pole at these valuations. Overpriced by 3-4x in my view. When they fall by 70-80%, will buy some.
[+] [-] alphagrep12345|7 years ago|reply
1. Humans aren't gonna trust SDCs easily. The way I look at it, SDCs would be used only to transport freight for a few years before people can trust it enough for ride sharing. I personally believe that companies should focus on self-driving trucking rather than self-driving cars and pivot into ride sharing after a few years of successful freight transport. People would trust the leader in the self-driving truck industry more than a top-notch but unproven tech company. Let alone cars, as simple as elevators in the buildings were operated by actual people before becoming completely autonomous.
2. Uber is not just in the USA. SDCs aren't gonna be approved everywhere, even after it becomes legal in the USA. Uber still has access to that market, but Waymo magically can't.
3. Uber has other verticals too (Uber Eats).
[+] [-] graaben|7 years ago|reply
This just highlights the need for better public transportation from cities to their airports.
[+] [-] sixhobbits|7 years ago|reply
Is loaning 20 million dollars to employees for personal use as dodgy as it sounds?
[+] [-] kapurs151|7 years ago|reply
Revenue
2016: $3.8bn
2017: $7.9bn
2018: $11.27bn
Trips
2016: 1.8bn
2017: 3.7bn
2018: 5.2bn
The internet is such a game-changer.
[+] [-] justfor1comment|7 years ago|reply
[+] [-] dougmwne|7 years ago|reply
[+] [-] jbhatab|7 years ago|reply
[+] [-] kgwgk|7 years ago|reply
[+] [-] CydeWeys|7 years ago|reply
[+] [-] goldcd|7 years ago|reply
Their problem is that if they rack up prices/commission to pay off their investors, then both their drivers and riders will simply switch to the next pre-IPO company that will connect them for less.
Uber in my mind is like all the other social media sites. We appreciate that they're the best thing to connect us at this time - but if something better comes along, both sides have no loyalty and will move on.
Can anybody imagine an Uber provider/rider they've met paying over the odds for an identical service because "they love the Uber brand"?