Uber's Sharply Slowing Growth

Jon York

Member
Nov 30, 2018
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New York City
Well, well, well... a lot of information is coming out about Uber on the eve of their IPO.

Two things are becoming clear in the information Uber has released so far in preparation for the IPO. One is that they haven't changed their ways. They're still doing something tricky with the way they report their financial information. In the past they've often used different standards for different periods. So in one period they'll report using a particular metric (which puts them in the best light) and a year later they'll report using a different metric - because the old metric would put things in a bad light. So they come up with a new metric to make things look better than they really are. Well, they're still doing that now.

The other thing that is becoming way too clear is that they are not growing at all. Not compared to how they were a few years ago. For instance, their ride-hailing revenue last year (2018) was up just 33% from 2017. In 2017 it was up 95% from 2016. So their growth rate there has been cut by two thirds. You might say, 'well, of course because no one can keep growing by the same huge rates they grew in the past'. And yes, that's very true, because at some point you get every single person as a customer who would ever consider being a customer.

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However, the reason that's a big problem is that even at their current level - they're still losing money big time! So if they are to ever get to profitability, they need those super-charged growth rates of the past. If they grow at a 33% (or less) annual rate - they'll never grow big enough to wipe out their losses.

As far as last year goes - Uber is reporting a loss of $3.03 billion. But who knows if that figure can be trusted. Whatever their real losses were, they have surely put the best spin on it. I would guess it was muc more than $3.03 billion and that that figure is the absolute best they could come up with while being able to maintain a semblance of credibility. By the way, $3.03 billion is equivalent to losing $8.3 million PER DAY!

Look How Much Money Autonomous Cars Are Draining from Uber
Here's the kicker, Uber's autonomous car program is losing the company up to $2 million PER DAY! The only thing that surprised me about that is - that it's not a large percentage of their total loss. I had thought the autonomous car program was one of the biggest money suckers for Uber. I thought if they just shelved the program they might be able to operate at a profit. But not even that is true. If they shelved the problem they'd still have a loss of $6-$7 million per day. And that indicates they're really not doing something right.
 

Graham

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Feb 4, 2019
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Glendale AZ
I don't get it.

Why wouldn't a company like this one be making money hand over fist? All they have to do is keep the software running, right? Unless paying insurance is really THAT much of a hit to the wallet.
 

Austin Bob

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Dec 15, 2018
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San Antonio
Yeah, it's really hard to imagine why they can't make money! I mean, if I did an app and had a few hundred guys in one city doing trips all day long and I made $1 on each trip - I think I could make a huge amount of money on that. So it really is unbelievable that they can't figure it out. Their expenses are so low. Imagine if they had to actually own the cars!
 

Mr. Gig

Member
Dec 6, 2018
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if I did an app and had a few hundred guys in one city doing trips all day long and I made $1 on each trip - I think I could make a huge amount of money on that.
Yes! Especially since you would bear NONE of the cost of providing the service to the customers. You would have NO ownership of the vehicles used to transport them. You would have none of the financial responsibilities of maintaining and paying for those vehicles. Each $1 would be almost pure profit. You would only have the expense of creating the app, and running an office with maybe 2-3 employees (in your 1-city version).
 

Geoff Prout

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May 7, 2019
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Tampa, Florida
Yes! Especially since you would bear NONE of the cost of providing the service to the customers. You would have NO ownership of the vehicles used to transport them. You would have none of the financial responsibilities of maintaining and paying for those vehicles. Each $1 would be almost pure profit. You would only have the expense of creating the app, and running an office with maybe 2-3 employees (in your 1-city version).
Maybe because Uber and Lyft are too busy undercutting each other by lowering their prices off the backs of drivers, when the real solution would be to actually charge riders more to be given a safe ride home during peak rush hour times and when passengers are given rides during 10pm-4am shifts when passengers have been drinking and are in no condition to drive. The reason I think increases are neccessary during those late night shifts is that $30-$60 ride fees for short trips home are certainly a better option than getting a DUI which can run $10,000-$20,000 more. Both companies need to realise rush hour and especially late weekend early morning bar shifts are the most dangerous for passengers and especially the drivers who get them home safely without so much as a tip or thanks when you are risking your life dealing with unruly passenger who can be rude and obnoxious. Maybe uber/Lyft need to act like gas stations across street from each other and certain times keep fees to riders same instead of lowballing each other they might actually make a profit and we the drivers might make a little more since surges and bonuses are lower and lower each month
 

Mr. Gig

Member
Dec 6, 2018
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Maybe because Uber and Lyft are too busy undercutting each other by lowering their prices off the backs of drivers, when the real solution would be to actually charge riders more
Boy, I sure agree with that @Geoff Prout. I've been saying that for years too - that they need to raise their prices. Or they never should have cut them in the first place. Their prices used to be a lot higher and they had a ton of business with happy riders & happy drivers. Plus drivers were making enough they could actually keep their cars going. I saw a guy today who has run his car into the ground - over 210,000 miles and he said he just can't afford to replace it - and it's on its last legs. So they're losing drivers because they're not paying them enough to maintain their cars!

But yes, it sure seems they were more profitable when their prices were higher. I like your idea about acting like the gas stations across the street from each other as well. Very insightful.