Amazon is insanely profitable.
Naked Capitalism ran a series on Uber. The bottom line was it could never become profitable and was effectively a fraud.
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More than that, if you finance a car, the lender is likely to say “you can’t use this for Uber” (my car loan had words to that effect, anyway). Presumably, it would require some sort of business loan instead of an auto loan.
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I drive for Lyft and am pretty sure they can go the same route. Their only saving grace is they are not as big as Uber for now and people have a better view of them. But that could change and they could end up in the same mess.
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Yeah, cos the depreciation on the car will run way higher than it would for standard use. So the collateral is less valuable. Which is precisely why a deal which looks ok for drivers on its face is actually crap. And that’s with Uber effectively subsidizing eaxh ride right now.
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Sure they are. They keep paying humans. Bonuses for signing up, minimum wage in some cities, ads, servers that have to be bulletproof 24/7/365. If they were the only game in town it would be one thing, but they are literally losing market share every day as more and more companies crop up. So in order to not lose the people who don’t officially work for them, they have to keep paying drivers more so they’ll keep working for Uber.
3 billion they lost last year alone I understand.
If they could hurry up to the part where they get rid of the drivers they’d have a shot, but that’s not coming fast enough and I doubt it’ll make it here in time.
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That seems in conflict with the message that they’re not paying drivers a living wage. Most of these dotcoms like Amazon lose money not because the business isn’t profitable but because they are focused on expansion so their stock price doesn’t tank.
Oh, you can’t do it for long. Amazon and Uber have wages that anyone first starting out would find appealing but you don’t hear about people working the warehouse for seven years and getting raises for a reason. You think these Uber drivers are going to hang in there for years?
Employee turnover is something they all depend on. The issue is that you still need employees and since they’ve run out of the initial crew they now need $500 joining incentives, and then $750, and then and then…
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According to Uber, they lose money overall on rides in general, which is averaged out over all trips; while some may actually make a profit, on average they simply do not. Corporations have to keep their finances public, you know. Your doubt is immaterial
After this raging protest in 2014, I thought Lyft was well on its way out.
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In that case doesn’t that violate trade laws? I thought it was illegal to sell goods below cost to drive your competition out of business. We sue the Chinese for this.
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Not nearly as ginormous, either in terms of absolute amount of money or percentage of revenue, and not for as long.
“Your honor, what, exactly is “cost” in this case? We choose to overpay our drivers because we value their time, so that’s not really a “cost,” now, is it? We aren’t making widgets here, we’re helping people. People. And people are not widgets. PEOPLE ARE NOT WIDGETS YOUR HONOR, AND I WILL NOT STAND BY WHILE YOU SAY THEY ARE COGS TO BE CHANGED OUT!”
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No, it’s not even close to illegal. In fact, you are completely free to give away anything you like at zero cost to the customer and it happens all the time. If it was illegal to lose money on transactions — purposefully or not — very few businesses would ever make it past the 1st month, and Walmart would never have been able to take over retail marketing in the US in the way it has.
You are thinking of anti-trust and anti-monopoly legislation and/or “dumping” laws, which is NOT the same. You’d have to show a pattern of unfair competition. There’s nothing unfair about gambling your future on current low prices, at least if you’re not a VC/shareholder in the company ^^’ .
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Amazon lost money early on because they were investing a lot in mostly fixed costs, which meant they could build economies of scale as they increased market share and volume by leveraging those fixed-cost assets. Uber is investing in essentially nothing permanent, basically just their brand. Their app isn’t really patentable tech, and they don’t really have any other assets aside from name recognition and market share. There are no economies of scale to realize as market share grows because Uber doesn’t actually own much of anything, so they have to pay the same costs for each new sale rather than constantly paying a fractionally lower cost with every sale. The only real play they can make is to establish a monopoly or cartel position, then raise prices while dropping the driver’s share of each fare. Even that might not work though, as this will no doubt cause even more drivers to drop out, creating the need to spend yet more money on driver incentives.
Uber likes to do a lot of handwaving about self-driving cars as the answer to their problems, but I think that’s also a pipe dream. To make that work they would have to have 100% functional technology NOW, so they could pour basically all of their remaining money into vehicles and fleet management facilities to get the economy of scale train moving before they run out of cash. They currently appear to have the same semi-experimental half-assed technology that Google has been puttering around with for the last decade, and even that has bought them a big fat lawsuit from Google.
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Amazon still loses money like water, you know, and has never been profitable that I know of.
[quote=“diemos3211, post:34, topic:98659”]
They currently appear to have the same semi-experimental half-assed technology that Google has been puttering around with for the last decade, and even that has bought them a big fat lawsuit from Google.
[/quote]No, the engineer that was working for Google created his own company, sold it to his roommate for deniability, left Google and then sold it to Uber. It’s shady as hell.
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That used to be true, though not because they were losing money so much as shoveling all their revenue into capital investment for growth and new business opportunities to further increase revenue (e.g. AWS was expensive to create). In the last couple years they have started posting profits, though.
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Isn’t that how mass transit died anyway? Auto manufacturers buying lawmakers to just kinda quietly not giving them enough money to survive in any useable form.
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Even if Uber died a fiery death, I feel like Kalanick would simply slither and slime his way out without any big repercussions
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First off, the idea that Uber loses money on ever ride is on its face… how should I put this… not very well thought out.
Uber’s cost for each ride in its ride sharing service is just about nothing. You download an app. It takes a cut of the fare. Some computer bits get moved around. Uber does pay some subsidizes but those are minimal these days and only in new markets.
People chanting the “Uber loses money on every fare! Doom!” are looking at the total cost of their business vs. their revenue. Their revenue last year was over 5.5 billion (their cut) on gross revenue of around 25 billion. They lost $3 billion in 2016 but $1 billion of that was China. So, they lost $2 billion on $5.5 billion in revenue meaning they spent $7.5 billion.
So, big money loser, right? There’s a little problem with that argument. Uber is growing at a rate of about 40% PER QUARTER. Let’s say they double revenue this year. $11 billion in revenue. When Uber’s revenue doubles does their cost double?
No. Why? Because they don’t need to buy anything new to double revenue. They have the employees and computer infrastructure they need. In fact, they can spend less than they did last year because last year they had to build everything out.
But let’s say their expenses stayed the same. They spend 7.5 billion, they get 11 billion in revenue.
That’s 3.5 billion in profit. And that’s if they only double.
But they are going to be spending money. Why? Because they don’t just have ride sharing. They have self driving trucks. They have logistics. They have Uber Eats. They want to do R&D to build more profits in the future.
Maybe they’ll spend $3.5 billion on that and break even.
Anyone who says Uber is doomed needs a course in basic business and economics.
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