"This Is A Cash-Burning Machine" - Uber Opens Up Its Books, Shows Staggering Losses

Tyler Durden's picture

Amid a sudden and seemingly endless stream of public relations disasters (senior execs leaving, sexual harrassment scandals, uncomfortable video clips, self-driving car fiascos, secret software programs, and mishandled DUIs), Uber opened up its books to Bloomberg, prompting one analyst to exclaim "this is a cash-burniung machine."

The last couple of months have been a constant PR battle for the CEO Travis Kalanick.

  1. Another tale of sexism and unacceptable workplace behavior in Silicon Valley company has emerged. This time it's at Uber, according to an explosive blog post published on Sunday by a former company engineer named Susan Fowler Riggetti.
  2. Uber's newly-hired VP of engineering Amit Singhal was asked to, and did, resign on Monday after the company learned from Recode that he was accused of sexual harassment shortly before leaving Google a year ago. Here's more on the difficult position of former employers in this case.
  3. A video showing Uber CEO Travis Kalanick rudely arguing with a long-time driver at the end of his ride was published by Bloomberg. "I need leadership help," Kalanick said in an apology he issued shortly after.
  4. Susan Fowler Rigetti, the former Uber engineer who wrote of discrimination, said she's hired attorneys after a new law firm began to investigate her claims. Uber confirmed it has hired Perkins Coie, which reports to former A.G. Eric Holder, who's leading the investigation.
  5. Uber said on Thursday that it will finally apply for a DMV permit to test self-driving cars in California after its cars' registrations were revoked in December because it refused to get the permit.
  6. Charlie Miller, one of the two famous car hackers who joined Uber's Advanced Technology Center in August 2015, announced he's leaving the company.
  7. The New York Times uncovered a secret Uber program called Greyball, through which the company uses software and data to evade law enforcement in cities.
  8. Keala Lusk, a former Uber engineer, published a blog post detailing how her female manager mistreated her, signaling that the company's problematic culture isn't limited to the men who work there.
  9. Ed Baker, Uber's head of product and growth, resigned. Though the reason is unclear, he was allegedly seen kissing another employee three years ago, which was anonymously communicated to board member Arianna Huffington, according to Recode.
  10. A report outlines a trip by a group of Uber employees to a Seoul karaoke-escort bar in 2014, which included company CEO Travis Kalanick and his girlfriend, Gabi Holzwarth. After arriving, several male employees picked escorts to sit with, and went to sing karaoke. Uncomfortable, a female marketing manager, who was part of the group, left after a couple of minutes, while Holzwarth and Kalanick left after an hour.
  11. California regulators have recommended that Uber be fined $1.13 million for failing to investigate and/or suspend drivers who are reported by a passenger to be intoxicated. The state requires ride-hailing companies to have a zero-tolerance policy for driving under the influence of alcohol or drugs.
  12. A new report says Uber used a secret program dubbed "Hell' to track Lyft drivers to see if they were driving for both ride-hailing services and otherwise stifle competition. Only a small group of Uber employees, including CEO Travis Kalanick, knew about the program, according to a story in The Information, which was based on an anonymous source who was not authorized to speak publicly.

But, Uber, according to The Wall Street Journal's Unicorn tracking database, remains the most valuable private company in the world.

 

In December we warned of the potential for massive losses at the ride-sharing company, and as Bloomberg's Eric Necomer reports, we were not wrong. Uber isn't required to report its finances publicly, but the privately held company has decided to forgo that luxury for the first time. Uber said its revenue growth is outpacing losses, hoping to show the business is on a strong trajectory as it attempts to address a recent cascade of scandals.

The good news is that the ride-hailing giant more than doubled gross bookings in 2016 to $20 billion, according to financial information Uber shared with Bloomberg, and net revenue was $6.5 billion. Uber’s business is indeed massive and getting bigger. In the last three months of 2016, gross bookings increased 28 percent from the previous quarter to $6.9 billion. The company generated $2.9 billion in revenue, a 74 percent increase from the third quarter.

 

However, adjusted net losses were $2.8 billion, excluding the China business, which it sold last summer. Losses in the last three months of 2016 rose 5 percent over the same period to $991 million.

Uber declined to report first-quarter numbers, saying they were in line with expectations but that the company hasn’t yet presented them to investors.

While the rate of sales growth compared with losses is encouraging, Uber is still losing a significant sum, said Evan Rawley, a business professor at Columbia University. “That’s a lot of cash to burn in a quarter,” he said. Jeff Jones, the company’s president of ridesharing who resigned last month, previously joked to staff that he joined Uber expecting P&L, meaning a profit and loss statement, but only found an L.

Bloomberg notes that Uber has burned through at least $8 billion in its lifetime. The company said it has $7 billion of cash on hand, along with an untapped $2.3 billion credit facility.

We leave it to none other than Aswath Damodaran, infamous valuation guru and finance professor at New York University - who nailed Theranos by warning in 2015 of numerous red flags about the unicorn...

"Uber is a one-of-a-kind company, in good ways and bad ways. It’s going to be a case study... This is a cash-burning machine."

And that Mr. Damodaran is what makes it worth $68 billion!!!???

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nuubee's picture

Who would have guessed that yet ANOTHER silicon-valley startup put market-share and ponzi-like investor dollars before a positive cash flow... I could have sworn they'd get serious eventually..

NugginFuts's picture

Golly, it feels all 2000ish again! Can't wait to see which breaks first - SNAP, UBER, or TSLA.

I predict the three will collapse into one: A puking ghost riding a Model 3 Uber (with a dash of SolarCity to charge up back at home).

#NotWinning!

philipat's picture

This should be a cash cow like Trip Advisor and Airbnb. They have an enormous cashflow and their operating expenses, once the software is in place, should be negligible. They must be doing something seriously stupid (or criminal?) to lose money on those cashflows? They don't need many staff and their overheads should be tiny if it is efficiently and professionally managed without ego trips.

Of course, the barriers to entry are commensurately very low so it will not last and if they aren't making money NOW, they probably never will so I wouldn't recommend buying if they IPO!! I live in Indonesia where alternatives, Go-Jek and Grab have taken over the market other than for tourists who don't know the local scene. The business model of these alternatives is slightly different and one can lock in a price online (The commission is paid to the operator from a cash deposit from drivers) then pay cash to the driver so don't need to divulge Credit Card info.

dumbhandle's picture

Ethereum or a successor will disintermediate Airbnb, Uber, and companies like it. Any model that can be automated with decentralized programmable currency is vulnerable.

HowdyDoody's picture

What a robust economy - Uber, AirBnb, Palantir, WeWork, FlipKart, Pinterest, Dropbox, Theranos, Spotify, Lyft, SnapDeal ...

Laowei Gweilo's picture

Korean karaoke-escort bars are awesome

Ripoff though $200-300 for no foreplay no sex -_- 

but they're usually ex models who are OK selling themselves as long as there's no sex 

so on the plus side they're usually hot and clean

usually ... some will go home with you haha depends on the club

Yukon Cornholius's picture

Does Uber own any patents or property? No? Just retards using their own vehicles and smartphones? Wow. What a (((business model!)))

Killdo's picture

I know Lyft charges drivers 25% of their profit (far too much since drivers carry all the risk and they pay the deudactable 1500 in case of car damage - if they use the rental). 

It's actually much worse since after they take 25% the driver has to pay for the gas, toll etc. If you take that into the account the Lyft takes almost 35-40% for doing nothing apart from providing access to their app. It's feudalism - nothing to do with sharing -more to do with exploitation. 

here is a good article on this kind of fake Sharing and caring BS: 

https://howwegettonext.com/reversing-the-lies-of-the-sharing-economy-a85...

dumbhandle's picture

The model is so vulnerable.  There is nothing there.

Bay of Pigs's picture

Same in Vietnam. Try Thailand instead.

JRobby's picture

Another amazing black box super app turns out to be shit

JRobby's picture

Black boxes of shit. It's all shit. The people who Wall Street "anoint"  to hype the shit apps to insane valuations are shit. It's all shit

 

NurseRatched's picture

I haven't seen cash vaporize at this rate with nothing to show for it since ... well, since Hillary last ran for president.

lester1's picture

What the fuck are those Uber fat cats in California spending all the company money on ????

skinwalker's picture

Fat chicks are like mopeds: a helluva lotta fun to ride, but don't get caught doing it.

HowdyDoody's picture

Bug out places in New Zealand.

Ozymango's picture

Uber's burning through cash faster than Tesla is, so there's only one thing to do: BUY UBER STOCK!

yogibear's picture

LOL, plenty of social media losses.

Like the DOT COM days again.

Sam Clemons's picture

going to be the next AMZN.  

grunk's picture

Lose money on each trip, but make it up on volume.

undertow1141's picture

The Unicorns are staring to die.

29.5 hours's picture

Every one I talked to who have actually used Uber, have raved positive. I guess that means something...but I remain skeptical.

 

skinwalker's picture

I too remain skeptical about the future of the company, but by any measure uber is far superior to a cab.

pitz's picture

Uber is just a cab dispatch company.   So how could it be 'far superior to a cab'?

skinwalker's picture

Because you're driven by an American and not an Ethiopian.

Plus it costs less, picks you up quicker, and the cars are cleaner.

Trust me, I've ridden thousands of miles in cabs over the years and never will again so long as uber or something like it exists.

Snaffew's picture

you haven't ridden in that many ubers then...there are shit-tons of foreigners driving them, and the car is only as clean as the last customer.  The pick up is quick, I'll give you that.

JRobby's picture

If vomit and fast food wrappers are considered neat and clean?

pitz's picture

But Uber is dispatching cabs.  So you're still not making the case for anything being different about the rider experience, other than the dispatch system is nicer.

Benito_Camela's picture

Wrong. Plenty of Somalis and Ethiopians and Cubans and Iraqis and anything other than Americans driving Ubers in every city I've used one, and that's a lot. The difference is you're in someone's personal (increasingly beat to shit - used to require new-ish cars) vehicle trying to understand what the eff they are saying. Virtually zero difference from cabs. 

Lockesmith's picture

No cunty bitches on the other end of a phone line to mess up your order, lifts on demand, very harsh punishment against asshole drivers

Kidbuck's picture

Know a cop in Washington, D.C. whose favorite ticket to write is "stinkin' hack." That's an actual catagory of offense in D.C because of the hygiene of the cab drivers.

DEMIZEN's picture

imagine a similar to uber platform which not so hard to develop but with peer-to-peer payments no other middle men than developers. All you need is couple of algos to weed out bad apples that overcharge and create fuzz. end of uber. they anchored themselves as having better access to information than taxi. it is their strenght and weakness at the same time.

 

and good luck regulating that one.

 

btw: on the list there is plenty others worse off, but when you take in mergers and some prudent pre write-off accounting, all these BS companies will end up with a medal.  dropbox? give me a break.

JRobby's picture

Uber is shit. The asshole that runs it is a whining, mealy mouthed little punk cocksucker non-male who should be beaten and ethanized. You know, typical west coast balless semen guzzler.

mkkby's picture

He's a prick, who should be euthanized.  But no homo.  Just ask all the employees he's harassed.

Snaffew's picture

sure...the service you get is 50 percent cheaper than what it's actually worth just to break even.  What's not to like as a consumer?  Maybe they should sell beers for 25 cents and burgers for a dime to go with that ride.

Buckaroo Banzai's picture

Bingo. Any business that sells dollar bills for two quarters is going to be a very popular, very fast-growing business. But it ain't gonna last.

Bernie Madolf's picture

Cash burn is the new profit. If only every company was unprofitable we'd all be rich beyond our wildest dreams!

NugginFuts's picture

Perhaps wealth destruction in a fiat society is an act of patriotism.

Just sayin'.

yogibear's picture

There was a movie called The producer's"  that gave everyone a clue on how to scam.

Using other people's money.

HowdyDoody's picture

Springtime for Hitler and Germany!

https://www.youtube.com/watch?v=HPXHRX8Q2hs

I was born in Dusseldorf and that is why they call me Rolf.

Bemused Observer's picture

Don't be stupid, be a smarty....Come and join the Nazi Party!

roddy6667's picture

Rodney Debris. All his shows closed in rehearsal.

Bam_Man's picture

And it's "worth" $68 billion.

For now.

ROFLMAO.

yogibear's picture

Fund managers are screaming for more IPO scams like SNAP.

Billions of bag holders.

Arnold's picture

Ronco IPO coming soon.
Saudi Aramsco IPO coming soon.

I am a Man I am Forty's picture

I use these folks all the time.  This is disappointing, how's Lyft doing financially?

TheSilentMajority's picture

They lose about 50% on each customer, but they makeup for it with big volumes.

If amazon, tesla, and snap can do it, why the bloody hell not Uber also!