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Uber Revenue Growth Slows, Losses Persist as 2019 IPO Draws Near
- throwaway-1283 8y agoI don't think this is a reflection of Lyft taking market share...more likely that the ridesharing industry has just matured. I remember getting so much joy out of requesting an Uber back in the earlier days. Nowadays I get about as much joy out of Uber(pool) as using the bus, sometimes less because the wait time has increased so much.
- sjjshvuiajhz 8y agoUberPool Express has some things in common with the bus, although I’ve still never been slapped in the face by a homeless man in an Uber.
- crispyporkbites 8y agoI get a bus twice a day in London and not once has this or even the thought of this come into my head.
- hcnews 8y agoI can totally anticipate this happening in SF.
- nerfhammer 8y agoOne time in SF on the subway I saw an ostensibly homeless woman go up to a random man and demand his sweater. When he refused, she tried to physically tear it off of him. He had to sort of kick and shove her away until he could get away.
- clairity 8y agohave you ever seen your neighbor get dragged running and hanging out of the passenger side window by an angry uber driver? have you had someone slap you who is not homeless? i have. i get that you want to equate homeless folks on transit with violence but you did a really bad job of it.
- sjjshvuiajhz 8y agoI’m just describing an event that happened to me. There are a lot of problems with Uber, but one thing it’s not is the cheapest and most convenient climate-controlled shelter for the city’s destitute mentally ill.
- clairity 8y ago> "...it’s not is the cheapest and most convenient climate-controlled shelter for the city’s destitute mentally ill." i can appreciate this point, but you're still insinuating that destitute people are bad, rather than realizing the complexity of the human condition as embodied in that other living being. why not try to find and express some empathy, or even just some sympathy, for these folks? is there any gain for you to further put them down this way? are you so afraid of the homeless that you need to make sure random people on the internet don't associate an anonymized you with them?
- sjjshvuiajhz 8y agoAfter being assaulted by that stranger I thought about him a lot: 1) He probably has been abused and harmed many times, perhaps in his childhood. 2) He probably expects the worst from people, and thinks that everyone is out to get him. 3) He may be suffering from schizophrenia and literally thought I was attacking him somehow (I was sitting across from him with earbuds in reading a kindle). 4) Becuase there is not enough housing to go around here, the standards are higher, in terms of having an agreeable personality/job skills/overall shit-togetherness to secure a place to live, whether by earning a salary or staying on a friend’s couch or in a homeless shelter. 5) Feedback loops mean that once you are homeless, you suffer a lot and all of the above issues probably get worse. My personality is such that I end up caring about and loving people that I spend time around or think about a lot. But I’ve learned the hard way that even if you love someone, you need to look out for yourself when trying to help them.
- sjjshvuiajhz 8y agoAnd to expand on that a bit: It seems that transit in the Bay Area serves multiple purposes. 1) Getting you from point A to point B. 2) Mobile climate-controlled shelter for homeless people. My claim is that purpose 1 is at odds with purpose 2. I’m all for solutions to the problem of not enough shelter. I don’t think the SFMTA is the solution, or if it is, then we should accept that companies like Uber are going to take its market share for purpose 1.
- hcnews 8y agoOuch and sorry.
- sherlock_h 8y agoThere is definitely an element of the competition heating up. Lyft has been steadily gaining market shares in the U.S. over the past couple of months/years. Hovers around 30% to 35% now, depending on the source. https://www.recode.net/2018/12/12/18134882/lyft-uber-ride-car-market-share https://www.recode.net/2018/12/12/18134882/lyft-uber-ride-ca...
- mrep 8y agoNot surprising. I have both apps and since they both give you the price upfront, I just choose whichever one is cheaper assuming wait times are similar.
- kornish 8y ago> Of the $11.4 billion in net revenue the company generated in 2018, $3 billion came in the last three months of the year, up only 2 percent from the previous quarter. To what degree does Uber's main business have seasonality? Are people going more places when it's nicer out in the Northern hemisphere?
- bunderbunder 8y agoI'd expect it to be positively correlated with nice weather in tourist destinations, because more people would be in town at all. I'd expect it to be inversely correlated in major urban centers, because the number of people needing to get around will have less seasonal variability, and walking, waiting for a bus and riding a bike are all relatively more attractive options when it's not gross outside.
- moorhosj 8y agoPretty big overlap between tourist destinations and urban centers.
- bunderbunder 8y agoThere is, but, percentage-wise, the seasonal swing to the number of people in town is much bigger for Traverse City, MI than it is for New York, NY.
- moorhosj 8y agoThe discussion was about Uber's overall revenue. I imagine a far larger percent of their revenue comes from NYC tourists than Traverse City tourists. Traverse City gets about 3.5 million tourists a year [1] compared to 63 million for NYC [2]. [1] https://www.record-eagle.com/news/local_news/tourism-region-s-tourism-industry-continues-to-surge/article_1ffad0db-14ea-5219-9697-e1918c2a282d.html https://www.record-eagle.com/news/local_news/tourism-region-... [2] https://nycfuture.org/research/destination-new-york https://nycfuture.org/research/destination-new-york
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- mark_l_watson 8y agoI wonder how much effect it would have on sales volume if ride prices were adjusted upwards to the break-even point? They must know what they are doing but it almost always seems counterintuitive to me to sell below cost over a long time period. I like Uber as a service but I don’t really care how they do, except that a friend works at their AI lab.
- ghaff 8y agoIt seems odd to me as well. I don’t use these services a lot but when I do it’s almist always because they’re better than dealing with a taxi. Rarely do I choose them on the basis of price.
- BillionaireBear 8y agoFor the most part, a taxi is only better when I'm at either an airport or a hotel. Otherwise, I far prefer Uber/Lyft because it's on-demand, no cash needed and don't have to explain my route or destination.
- ghaff 8y agoYep. Sometimes I take a taxi from the airport because it’s right there and ready to go even though it costs more. Otherwise I will, within reason, use whatever gives me the best experiencr.
- bunderbunder 8y agoI'd probably use it less. Most my rides are to/from airports on business trips. Taking a cab usually involves a shorter wait, especially on a ride from an airport, so, when I choose rideshare, the steep discount is my main reason for doing so. At approximate price parity, there's a decent chance I remove every ride-getting app but Curb from my phone in the name of de-cluttering. Supposedly Uber's original pitch to early stage investors was that they were going to grow so fast that they would quickly put all the competition out of business, and then, having achieved a monopoly, would begin to jack their fares way up. I don't know if that's true, but it's at least the only hypothesis that would seem to fit all the publicly available information. If it is true, then that would imply that they never intended to sell below cost over a long time period. It would also explain why they've been flailing for ancillary revenue sources since just about the exact moment it became clear that the story in their main market was going to be one of trench warfare rather than blitzkrieg.
- b_tterc_p 8y agoI think uber’s rewards program will be successful and boost sales. I’ve switched all of my business meals and longer rides to Uber for this alone. Other food delivery services don’t offer a clear kickback. Lyft has a nice but poorly thought out program that gives you $5 in personal credit for every 5 business trips no matter how short.
- Slartie 8y agoThe fact that you were apparently able to do what you did is a perfect indicator for the problem behind that "sales boost": it is a straw fire. And a very expensive one. How fast will you be gone once the nice rewards give way to price increases necessary to reach a sustainable business covering expenses, let alone profitability?
- lozaning 8y agoI wont switch. 80% of my ubers get expensed. Keep me fat and happy with rewards, and I'll keep expensing it regardless of the cost, which doesnt really effect me, only our controller.
- i_am_nomad 8y agoSo now Uber's competitors just have to market to your controller, which is in fact easier than marketing to everyone at your company.
- GCA10 8y agoHarder than it seems. AmericanExpress had outsized market share in the corporate travel market for about 30 years, even though it never struck me as a superior product to Visa-based cards. Not sure who they hypnotized to establish that edge, but it became strangely durable.
- gamblor956 8y agoFor the longest time, American Express offered companies the best control over how corporate cards were used, and the best integration to financial software like Oracle/SAP/Concur.
- throwaway-1283 8y agoThe irony of Uber and Lyft both losing so much money is Lyft especially is known for paying some of the highest SWE salaries in SF.
- barbecue_sauce 8y agoThese companies hire so many engineers and then have them do busy-work like building their own internal versions of Slack or new proprietary databases.
- hcnews 8y agoThe cost of a SWE is nowhere close to the promotions and incentives rolled out to millions of users (imagine something simple like 5$ per user per month). SWEs are paid a lot in Bay Area but at least in top companies they are very well worth it. Disclaimer: I am a SWE at Uber.
- woolvalley 8y agoSWE salary is only a part of total comp, and I would be a bit concerned with their stock value compared to the much bigger business that is Uber. So I understand why the salary portion might be high, to compensate for some of that risk.
- benatkin 8y agoToday I missed getting picked up by an Uber. I think the driver must have waited like 30 seconds before giving up. Still, it was my bad. He apparently accepted the ride before cancelling it, because the pickup and drop-off addresses were different. I got a $6.50 charge instead of the normal $5.00 cancellation charge. I wrote into Uber about it, and instead of refunding me $1.50 they refunded to full $6.50 amount. Sometimes my Uber fares are super cheap. I paid $3.00 to go a mile in snowy weather in Denver the other day. It was a shared ride but nobody picked up. I think Uber is spending lots of money, and could probably make their numbers better by tightening up. They'd lose some of my rides, but probably less than half of them. In more than half of them public transportation is inconvenient or unavailable for the full route (the last mile problem is relevant to me).
- exabrial 8y agoThis last Sunday morning, Uber made 3 charges to my checking account totaling over $1.1k total, for three rides at 6:59am, 7:00am, and 7:01am. I haven't used them in about 2 years (they put me in a car with a guy that admitted to sexually assaulting his drunk female passengers). It was a nightmare trying to get ahold of their customer service to return my money. They have no phone numbers, it's all bots that answer their social media and email. I for one am excited by the prospect of their failure.
- cycrutchfield 8y agoIt's Uber's fault that you couldn't secure your own debit card?
- astura 8y agoWhy bother contacting Uber at all? Just call your bank and report the charges as fraudulent.
- georgeecollins 8y agoI don't know what to say about this because as a lifelong value investor I cannot accept the valuation of Uber based on it's earnings. But the same logic held me back from investing in Facebook and Google, which did not make any sense to me at the moment of their IPO. How do I decide what Uber's earnings will be in five years?
- todd3834 8y agoI've been thinking about this too. I think you are betting on whether or not they are still just getting started. I'm thinking about self driving cars and how much growth can happen there if they crack that nut. When Facebook IPO'd did they already have the self serve ad product rolled out? I believe Google did not and if you could imagine that future then it might have been easier to see a bright future. I didn't see Android coming until the iPhone came out as another example.
- deleted 8y ago[deleted]
- btilly 8y agoWarren Buffett's advice on this is simple. If he doesn't understand it, he doesn't invest. No matter what the rest of the world thinks. He famously missed the dot com boom. And in the middle of it, gave a private speech about exactly why, about how few of those companies were likely to be around in a few years even if the internet were exactly as successful as hoped for. He was widely derided as being behind the times, out of date, and so on for a couple of years. But looking back now, he looks prescient. If you are a value investor and don't understand how to value it, don't invest.
- bunderbunder 8y agoAnd it's not like he just flat out didn't invest all the money he wasn't putting into Geocities and Lycos. He was just putting it into other things, mostly stuff that was less the hot new thing, and therefore less in demand, and therefore more favorably priced. I don't think he regrets his conservatism. From 1990 through now, BRK.A is up 4,200%, while the NASDAQ composite is up only 1,500%.
- joshe 8y agoWhat is Uber's long term moat/pricing power? To compete in a local market you just need to sign up 5000 or so drivers. At a $5 signup bonus that costs like $25,000. You can just be the third app, most drivers already swap between Lyft/Uber. You could even form a drivers cooperative and just give all the charges to drivers (like farmers do). Regulatory capture seems like the only real route to sustainable profits with their existing main product. What they really need is something where they are the only one or two legal providers for a locale. A different model of what they are doing is using their massive revenue growth (not profit) to raise money to fund a search for real pricing power with food delivery, shared bikes, and Uber freight.
- todd3834 8y agoThinking about self driving cars I think the experience in the vehicle will be a potential differentiator.
- cyan_atrus 8y agonot that it necessarily changes your argument, but the signup bonuses that uber / lyft offer are significantly higher than $5 (closer to $1k), and are structured in such a way to ensure you're not dual-apping. "A different model of what they are doing is using their massive revenue growth (not profit) to raise money to fund a search for real pricing power with food delivery, shared bikes, and Uber freight." I suspect this isn't far from the truth.
- joshe 8y agoTotally agree about the higher sign up bonuses. Though they are really offering higher driver pay for a limited time on signup. To compete I'd just offer that higher driver pay all the time by taking less fees than Uber. Not correcting you or anything, just embroidering. Over 10 years or so, this devolves into the taxi business, which without medallions is very low margin. [1] [1] https://www.forbes.com/sites/lensherman/2017/12/14/why-cant-uber-make-money/ https://www.forbes.com/sites/lensherman/2017/12/14/why-cant-...
- treis 8y ago
- identity_zero 8y agoLet the superficial bad news divert investor interest so that the IPO is cheap.
- sherlock_h 8y agoOver the long run, at least in the U.S. it seems like Uber/Lyft are edging towards a comfortable duopoly. Usually their prices move in lockstep (each has insights into the other company's prices through email receipt intelligence, credit card intelligence, webscraping, etc.). And their services are fairly exchangeable. For either one to win there needs to be either a massive cost advantage or some sort of stickiness factor – which neither have. Will be fun to follow the '19 IPO season with Postmates on the horizon and DoorDash fat with Softbank money
- phamilton 8y ago> comfortable duopoly I don't think they have hit true market dynamics yet (rides are subsidized), so comfortable might be a strong word here.
- reitzensteinm 8y agoDo you have a source for the ride subsidization? My understanding is that for mature markets they're making a decent profit; their losses from subsidies are from new markets, or new initiatives in existing markets (Pool, Eats etc). There have been a number of "Uber is cheaper than taxis because they are losing money" newspaper articles, but they usually point to the loss of the company as a whole.
- bduerst 8y agoI don't think there's clear metrics into market and price performance because they're still privately traded, and changing consistently.
- maxxxxx 8y agoUntil the money runs out.
- celticninja 8y agoIt's a race to either profitability or the death of the opposition, at which point subsidies disappear and prices rise, so does Ubers cut of the fares.
- TuringNYC 8y agoWhile my story is anecdata I wonder if it speaks to a broader issue: I'm an Uber super-user. I used uber 400+ times per year in 2015, another 400 times 2016, and then again 400+ times in 2017. Then my rides per year went to 0 in 2018 and 0 in 2019 so far. It wasnt about price, the app just became too buggy to the point of being unusable. The customer service became unresponsive. I simply switched to Lyft/Careem/Via. Certainly this didn't just happen to me. I wonder how many people are in my situation and how many users Uber has lost. It is nice they are devoting engineers to far-flung projects like food delivery, helicopter rides, ML-as-a-service projects (Michaelangelo), and GPU Databases (AresDB) but I honestly just wish they would fix their main money maker -- ride hailing. I know this sounds like a sob story, but here are real points: 1. Cant add a credit card, just get a generic error. No error code that I can give customer service, just a generic error. 1b. For a while, didnt even get a credit card entry form, just the stupid green scanner box to photo-scan the card, which didnt work on any of my cards despite me having a top of the line iPhoneX camera 2. Cant add any credit cards no matter how many I try. Reach out to customer service and I get a generic response "I see you cant log into your app."...umm no. I'm already in the app adding a credit card obviously I can log in. 3. CAN add credit card, thanks for customer service, probably only because I started adding Dara Khosrowshahi @dkhos on my irate twitter messages....but when I try to hail a ride, "Payment Failure" regardless of how many cards I try. This is the worst error, because it is a silent runtime failure ...who wants to risk those when you're at the airport desperately needing a ride. 4. Pickup locations stale (SFO Airport changed ride hailing to the roof of the airport. Lyft immediately updated their app but Uber had stale pickup locations. Lyft had a service rep standing at the pickup location helping customers with the transition, Uber was nowhere on this -- in their own home city airport!) 5. Customer service provides useless generic responses and never closes a ticket. I understand customer service was outsourced to another company, which I wont name. 6. I'm a VIP customer in a sense. 2000 rides in a short period of time! Come on...if you are going to ignore people at least see if they are an early adopter / megauser and court your top customers! 7. Tried the pre-pay option using multiple cards...Bam! Payment Failure. Please take my money! 8. Within the span of a year in 2017, I used Uber multiple times at airports in SF, LA, NYC, Singapore, Taiwan. Given all the ML prowess at the firm, don't they realize I'm a price-insensitive business user? Come on...this is the cohort you want on your platform. Didn't all the ML segment me into the most valuable cohort? Sometimes I feel like i'm trapped in some bad A/B test they are doing. I even tried to delete the entire account and start anew with a new email and new credit card, but it almost seems like my name itself has been blacklisted. No response from customer service. If Uber/Lyft were public companies, i'd be shorting Uber and go long on Lyft. I love both, but I can already see the disarray.
- NoblePublius 8y agoSaudi Arabia owns 10% of Uber and executes people for being gay.
- WC3w6pXxgGd 8y agoYour point?
- cheeze 8y agoFunny to think that this is just one of the many reasons not to use Uber.
- blub 8y agoYes, let's ask individuals to constrain SA's influence by not using Uber, when the US and many European governments continue to support them. One must be stuck in the 50s to think that individual buyers have any power over corporations.
- justfor1comment 8y agoUber is getting more expensive with time as they try to consolidate losses. For my commute to work nowadays Express Pool costs the same as UberX did a year ago. And of course express pool includes overtly long sight seeing detours and dangerous pick up/drop off points. This is getting prohibitively expensive and I plan to switch to an electric scooter + public transit in a few months.
- warp_factor 8y agoThis is a good summary of the VC economy: Use it as long as it is subsidized by VC Money, then switch back to whatever you used before.
- alexpetralia 8y agoAlso the part about one VC passing the buck to the next, allowing them all to benefit reputationally from asset inflation - until the bubble pops. Then only the last ones holding the bag lose. Edit: VC is actually not passing to VC, but larger investment funds like PE.
- bduerst 8y agoIn the case of unicorns that don't meet expectations, it's usually the employees who were compensated in stock or options left holding the bag, since investors try to lock in preferred payout.
- josefx 8y agoThat only works if the VC money runs out before your alternative goes out of business. A company with enough reserves killing local competition by undercuting it so much that everyone trying to compete has to lose money isn't unheard of.
- burlesona 8y agoI highly recommmend the electric scooter. So fast and so fun. I got this one: https://ecorecoscooter.com/product/l5 https://ecorecoscooter.com/product/l5
- blunte 8y agoMaybe because I'm outside the unicorn bubble I can't see the magic, but I find something very warped about a business strategy that combines stratospheric valuation, intentional regulatory non-compliance, perpetual capital injections, service misrepresentation, and unprofessional corporate behavior... and results in massive financial losses year after year. When I try to balance the elements, it frankly looks like an enormous grift. Some key early investors have probably made out really well, but at what cost to others involved? Not that the taxi industry didn't need disruption - it desperately needed a modern ride calling and fare estimating feature. But being well regulated and having to compete with a maverick service that simply ignored rules meant that the taxi industry lost while Uber gained. Drivers for Uber have come out losers as well, earning much less than expected. Passengers did well at first, but surge pricing and eventual regulatory costs eroded that gain as well. Late investors? The jury is still out on them, but likely they will be losers too. Who won?
- erikpukinskis 8y ago> the taxi industry didn't need disruption - it desperately needed a modern ride calling and fare estimating feature What about areas that had little to no taxi dispatch service before Uber/Lyft? And what about regions where supply of cab driving licenses was artificially constrained?
- mertd 8y agoOr where drivers: - could refuse service based on factors like customer's race without repercussions. - accept nothing but cash as payment. - take the "scenic" route when they realize you're from out of town. I'm not happy about the way Uber got here but I also don't want to go back to the world before it.
- capsulecorp 8y agoProgress won. It is infinitely easier, more affordable, transparent, convenient, and the overall experience of riding uber is hands down better than any Taxi experience I've ever had by a an extremely long shot, anyone I've spoken to agrees. Sure there are still improvements, but all in all, as a frequent user, I have to say getting a ride is hands down better with uber than before it.
- uptownfunk 8y agoI didn't see any talk of self-driving cars here. I think they're coming sooner than we think, and I suspect not having to pay drivers has been baked into the valuations by some of the firms providing those sweet sweet capital injections. I also wouldn't be surprised to see Tesla enter this space, given their advanced self-driving capability (frankly the one that has come closest to a normal consumer as myself). Re: Lyft vs Uber, I go for the cheapest usually, even though I know there are other differences. Many people who really care about the difference are mostly drivers. Many friends of mine who use both apps mainly use it to price differentiate.
- mandeepj 8y agoNah! We have a long way to get to full self-driving. There are just too many variables, unpredictable conditions - to be baked into a system. https://www.cnet.com/news/alphabet-google-waymo-ceo-john-krafcik-autonomous-cars-wont-ever-be-able-to-drive-in-all-conditions/ https://www.cnet.com/news/alphabet-google-waymo-ceo-john-kra...
- wankerrific 8y agoStill on track to allow SoftBank and the Saudi’s to foist this steaming turd on to the retail investor.
- HacklesRaised 8y agoLots of great arguments for and against herein, but how about the reality that the gig economy, that Uber exemplifies, is an unmitigated disaster for society, as a whole?
- jesse73 8y agoThe IPO is going to leave the public investors holding the bag
- zby 8y agoI really like this analysis: https://thinkgrowth.org/uber-is-going-to-0-and-benchmark-knows-it-1566fb51b308 https://thinkgrowth.org/uber-is-going-to-0-and-benchmark-kno... : Taxi service is not a good candidate for a global monopoly - because most rides are for local population and there is no need for a global trust. Each dispatcher needs to compete locally. This is different from for ecample AirBnb - where the customers come from away and need some global entity to trust. --- Uber also does not seem to do very well in the self-driving car competition, which could potentially save it. What is left is maybe some data play and maybe being useful for spy agencies - a global entity knowing, and also being able to manipulate, delay or maybe even deny in some cases, communication in remote states (but that probably would rely on it being a monopoly). But I am waiting for this to end bad. The SoftBank way of growing the valuation by doubling their investments seems really crazy.
- jacquesm 8y agoAt this stage the only reason they are doing an IPO is to bail out the earlier investors. You'd be pretty stupid to buy Uber stock, my prediction is that it will make a nice 'pop' on opening day to ensure the underwriters get away with it and a swift crash after that when the bottom drops out and all lock up periods expire. It's been done before.
- sjjshvuiajhz 8y agoWonder what happened with that profit in Q1 2018. Odd that the article didn’t mention it. Was that Uber proving to investors that they can turn the spigot and generate cash? Or some one-time factor?
- bernardlunn 8y agoHmm “Last year, bankers vying to lead the company’s initial public offering told Uber the market could value it at $120 billion.” Translation is “tell punters what they want to hear”. Reality, 10x revenue means high quality revenue and that is far from proven.