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.
Note:<p>- Expected to be teh largest IPO this year in the US.<p>- 10th largest all time<p>- trying to raise around $10B<p>- 2018 Year Ended Revenue $11.27 billion<p>- 2018 Year Ended Net Income $997 million<p>- 2017 Year End lost $4.03 billion.<p>- 10 billion trips in September 2018, up from 5 billion in September 2017<p>- Gross Bookings From Ridesharing $41.5 billion in 2018<p>- Revenue From Ridesharing Products $9.2 Billion in 2018<p>- List under UBER, good ticker!!<p>- 29 banks listed as underwriting the IPO, for those of you wondering, yes that is alot. Like 20+ more than a typical IPO.<p>From Bloomberg:<p>- 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.<p>Other Income is defined as:<p>- Interest income, which consists primarily of interest earned on our cash and cash equivalents and restricted cash and cash equivalents.<p>- Gain on divestitures, which consists of gain on sale of divested operations.<p>- Unrealized gain on investments, which consists primarily of gains from fair value adjustments relating to our investments such as our investment in Didi.<p>- 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.<p>- Change in fair value of embedded derivatives, which consists primarily of gains and losses on embedded derivatives related to our Convertible Notes.<p>- Other, which consists primarily of changes in the fair value of warrants and income from forfeitures of warrants.<p>- 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:(<p>Biggest Surprise to me:<p>- 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.<p>- So Uber is not really all that diversified in terms of ride sharing vs other, they are essentially Lyft in more markets.
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?<p>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?
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.<p>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.<p>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.
Their falling growth is the biggest concern for investors.<p>2016-7: 100% revenue growth, 105% trips, 51% MAPC
2017-8: 40% revenue growth, 40% trips, 33% MAPC
(MAPC = active users)<p>These are sharp drops in the growth rate.<p>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.<p>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?<p>And they had a loss of $890 million in the last quarter, and it's hard to see tangible evidence of margin improvement. (P128)<p>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.<p>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.<p>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.<p>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).<p>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).<p>Not sure how much of that is captured in the valuation.<p>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.<p>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.<p>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.
Wow those are some heavy risk disclosures:<p>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.<p>Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.<p>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.<p>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.<p>I wouldn't be surprised if after their first earnings release, Lyft stock goes below 40 USD.
As always, the most interesting place to start is "Risks to our business": <a href="https://www.sec.gov/Archives/edgar/data/1543151/000119312519103850/d647752ds1.htm#toc647752_2" rel="nofollow">https://www.sec.gov/Archives/edgar/data/1543151/000119312519...</a>
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.<p>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?<p>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.<p>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.
My observations<p>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.<p>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.<p>3. Uber has other verticals too (Uber Eats).
"We generated 15% of our Ridesharing Gross Bookings from trips that either started or were completed at an airport"<p>This just highlights the need for better public transportation from cities to their airports.
> 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.<p>Is loaning 20 million dollars to employees for personal use as dodgy as it sounds?
While I admit that the losses are staggering, the growth rates are also astounding:<p>Revenue<p>2016: $3.8bn<p>2017: $7.9bn<p>2018: $11.27bn<p>Trips<p>2016: 1.8bn<p>2017: 3.7bn<p>2018: 5.2bn<p>The internet is such a game-changer.
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:<p><pre><code> Q1 Q2 Q3 Q4
2017 -8% -0% -3% 9%
2018 18% 15% 9% -3%
</code></pre>
"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.<p>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.<p>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.<p>Can anybody imagine an Uber provider/rider they've met paying over the odds for an identical service because "they love the Uber brand"?
One of the most interesting things I see about Uber/Lyft's IPO has been their risk factors which says:<p><i>Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.</i>
As an IPO n00b, I have basic question: Let's say I'm a startup founder with revenues in $10M and want to raise money. Can't I just go straight to IPO instead of making VC rounds? It seems you don't need to be profitable or even have to have great outlook. Meanwhile majority of IPOs are getting magically funded anyway no matter what. On the top of it you get to even keep most of the voting shares. So what are the minimum requirements to do IPO?
Uber is clearly losing share to Lyft:
"In 2017, our ridesharing category position in the United States and Canada was significantly impacted by adverse publicity events. Although the rate of decline in our ridesharing category position has since moderated, our ridesharing category position generally declined in 2018 in the substantial majority of the regions in which we operate, impacted in part by heavy subsidies and discounts by our competitors in various markets that we felt compelled to match or exceed in order to remain competitive."
What’s there to see? What’s their value add? They’re not going to be profitable until driverless cars are a legit thing or they pivot into something with higher margins. This IPO will make incumbent banks a cool mint and early engineers paper millionaires but will hopefully blow up and let capital into companies that actually have a chance of staying solvent without successive massive influxes of cash.
Does anyone know how soon after an S-1 filing a company can issue their IPO? Is it basically up to them once they've filed or is there some vetting period at the SEC?<p>Will they be doing a road show next or is this something that they would have already done prior to the filing?
Is the Saudi family invested in Uber? There was a story that Uber was trying to cover up that the Prince that ordered the murder of the journalist Khashoggi - is this true? I know this is a tech forum, but I am not sure what to believe?
So 44% (4.4 billion) of their 2018 revenue was 'Other'.<p>Gain on divestiture 3,214<p>Unrealized gain on investments 1,996<p>If this was pure cash going into their bank account, does it mean they ran out of cash in 2018? Their working capital was 4,900 billion at the end of 2018.
people in here keep on saying that uber is not making profit. where is the source for that? i remember people saying the same thing about tesla. complete dogma. nobody seemed to understand that tesla was investing huge amounts of money into the development of other cars and expanding their factories. so what are ubers expenses? it does not pass the smell test. what is the expense that is killing them?<p>and people in here also dont seem to appreciate that uber can change their prices. they cant right now, but they will be able to soon. all the investor money floating around means that their competition may be able to operate in the red for extended periods of time. when the investor money dries up and everyone is surviving on profit, prices can go up. and they will go up because rideshare is the most efficient and cheapest way to do taxis -- nobody is going to come in and disrupt uber. except for driverless cars. but driverless cars arent going to happen. not anytime soon.<p>edit: i just looked at the chart in the document and as far as i can tell they are 3B in the red. not really sure what the units are in that chart. ok, well there are a lot of expenses where i cant tell exactly what they are, but their marketing expenses were 3B. 3 fucking billion dollars -- am i reading that correctl? thats the same amount by which they are in the red. i also see some very high numbers for management. all uber has to do is cut the fat and they will be making a nice profit.
if i were rich enough to invest, Uber would be an absolute landmine for me.<p>This company seems to be run like a mafia ring compared to lyft.
<a href="https://en.wikipedia.org/wiki/Uber#Criticism" rel="nofollow">https://en.wikipedia.org/wiki/Uber#Criticism</a>
So, here a line from their "Consolidated Statements of Operations":<p><pre><code> Other income (expense), net: 139, (16), 4,993
</code></pre>
The three numbers representing 2016, 2017 and 2018. The company is _only_ $997M down for 2018 because of that $4,993M item.<p>Can someone explain what that is? Will it re-occur in the coming years?
So... Let me see if I have this straight:<p>1. Uber is unprofitable and the only way it can become profitable is to get SDC's<p>2. Uber is significantly (years) behind Waymo in the SDC space.<p>3. Waymo will launch SDC taxi services first meaning:<p>- When it puts in an order for SDC components no one else is going to be buying in bulk and thus it can have effectively 100% of capacity of these specialized equipment makers<p>- It is going to be competing with other taxi/ride share services with all the cost advantages of SDC vehicles while its competitors are paying human drivers (and have basically no fat to cut from their current pricing)<p>- It will be able to improve its services so when someone else does launch their service will be inferior.<p>4. Uber expects that its users will stick to it over the course of years in the face of significantly cheaper competition.<p>5. Uber expects that it is going to be able to continue to use human drivers even while it competes against those same people with its SDC's (i.e. when your employer hires your replacement but expects you to train them).<p>I simply can't imagine how Uber is worth anything at the moment.
Convinced media-bias is the only reason why anyone could be "long $LYFT." They are a text-book "one trick pony" and too late for them to catch up in food delivery, international expansion, etc.