Uber Discloses 3-Yr $10-Billion Loss from Operations, Stalling Rideshare Revenue & 50 Pages of “Risk Factors” that Are Not for the Squeamish

But it had big tax benefits and one-time gains. And Uber Eats is hot, so to speak.

Uber Technologies’ IPO filing was made public today. The 330-page or so S-1 filing disclosed all kinds of goodies, including detailed but still unaudited pro-forma financial statements as of December 31, 2018, huge losses from operations, big tax benefits, large gains from the sale of some operations, stagnating rideshare revenues, and an enormous list of chilling “Risk Factors” that go beyond the usual CYA.

The filing, however, didn’t disclose the share price, the IPO valuation, and how much money the IPO will raise for Uber. On Tuesday, “people familiar with the matter” had told Reuters that Uber plans to raise $10 billion in the IPO. Most of the IPO shares would be sold by the company to raise funds, and a smaller amount would be sold by investors cashing out, the sources said.

The filing did not confirm this and instead left blanks or used placeholder amounts. But if true, $10 billion in shares sold would make this IPO one of the biggest tech IPOs. And the rumored $90 billion to $100 billion valuation would make it the biggest since Alibaba’s $169 billion IPO.

Uber will need every dime it raises in the IPO going forward because it’s got a little cash-burn situation in its operations that persists going forward, as it admitted in its “Risk Factors,” and it will need to raise more money, and if it cannot raise more money, it might not make it. Uber is upfront about this.

The company has already raised – and mostly burned through – over $20 billion so far in its 10 years of existence. This includes $15 billion in equity funding and over $6 billion in debt.

For the IPO, Morgan Stanley and Goldman Sachs are the lead underwriters, followed by an additional 27 underwriters. So in the future, expect brilliantly glowing rave-endorsement by analysts at these 29 institutions.

Uber’s rideshare revenues skyrocketed from $495 million in 2014 to $11.3 billion in 2018. But losses from operations have also skyrocketed. In 2017, these losses from operations hit $4 billion, over half the company’s revenues. In 2018, losses from operations were $3 billion. Over the past three years, these losses from operations added up to $10.1 billion:

The company also sits on $6.4 billion in cash, and if it raises $10 billion in new money in the IPO, it won’t run out for a while.

But revenue growth slowed last year: In Q4, total revenues at $2.974 billion were just 1% up from Q3 ($2.944 billion). Despite quarter-over-quarter stagnating revenues, the loss from operations jumped from $763 million in Q3 to $1.05 billion in Q4.

Even for the whole year, rideshare revenue growth bogged down. The growth was at food-delivery service Uber Eats. These are Uber’s “Core Platform” revenues for 2018:

  • Rideshare revenues inched up 7.1% to $9.18 billion
  • Uber Eats revenue jumped 148% to $1.46 billion
  • Vehicle Solutions revenues plunged 59% to $143 million
  • Other revenues jumped 149% to $112 million

Revenues from Uber Freight and Uber’s e-scooter and e-bike share programs booked $225 million in revenue.

Uber laments how its market share has gotten hit, particularly in the US and Canada, where series of hair-raising scandals shook the company:

Our category position has declined in certain geographies in recent periods. In 2017 our category position in the United States and Canada was significantly impacted by adverse publicity events.

Our ridesharing category position generally declined in 2018 in the substantial majority of the regions in which we operate, although at a slower rate.

We believe our category position is also impacted by heavy subsidies and discounts by our competition. Well-capitalized competitors, many of which took advantage of the adverse publicity we experienced in 2017 to improve their category positions, have pressured and may continue to put pressure on our margins as they are able to fund lower fares, service fee reductions, and consumer discounts and promotions to enter new markets and grow their category position.

So there may be a revenue problem in its rideshare division, and there is a cash-burn problem in its operations overall, but below the line all kinds of good things happened, even if the biggies just happened one time:

In 2018 alone, Uber booked net gains of $4.99 billion below the line:

  • A gain of $3.2 billion, including from selling some of its operations to Yandex and Grab;
  • An “unrealized gain on investment” of $2.0 billion;
  • Interest income of $104 million
  • “Other” income of $225 million
  • A loss due to “change in fair value of embedded derivatives” of $500 million
  • A loss of $45 million due foreign currency exchange of $45 million

It also booked a tax benefit of $282 million and interest expense of $648 million. These below-the-line-gains, expenses, and tax benefits turned its $3 billion loss from operations into a net income of about $1 billion.

In 2017, Uber didn’t have those kinds of massive below-the-line gains, except for a juicy $542 tax benefit. This tax benefit lowered its loss from $4.6 billion to a net loss $4.03 billion.

The “Risk Factors” are not for squeamish

The huge section of about 50 densely filled pages of “Risk Factors” contains the usual warnings about the things that might happen to the company that are typical in IPO filings. These items are a CYA exercise. If you get wiped out and sue the company or the underwriters, they will point you to the correct paragraph and tell you that you should have read this, and that if you had read this you would have known that you’d get wiped out, or something.

But Uber’s list contains all kinds of other stuff that is unique to the scandal-infested company that is defending itself in court on numerous life-threatening issues.

So here are a few of the key headlines of risk factors. Each headline comes with a long explanation that I will spare you. The bold is my heading. The indented text is the quoted headline from “Risk Factors”:

This is an example of the standard CYA:

The personal mobility, meal delivery, and logistics industries are highly competitive, with well-established and low-cost alternatives that have been available for decades, low barriers to entry, low switching costs, and well-capitalized competitors in nearly every major geographic region. If we are unable to compete effectively in these industries, our business and financial prospects would be adversely impacted.

Uber may never become profitable:

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.

The contractor v. employee issue could sink Uber:

Our business would be adversely affected if Drivers were classified as employees instead of independent contractors. The independent contractor status of Drivers is currently being challenged in courts and by government agencies in the United States and abroad.

The effects of the scandals:

Our workplace culture and forward-leaning approach created operational, compliance, and cultural challenges, and a failure to address these challenges would adversely impact our business, financial condition, operating results, and prospects.


Maintaining and enhancing our brand and reputation is critical to our business prospects. We have previously received significant media coverage and negative publicity, particularly in 2017, regarding our brand and reputation, and failure to rehabilitate our brand and reputation will cause our business to suffer.

Investors may get wiped out:

We may experience significant fluctuations in our operating results. If we are unable to achieve or sustain profitability, our prospects would be adversely affected and investors may lose some or all of the value of their investment.

Uber expects slowing growth, but it could get worse:

If our growth slows more significantly than we currently expect, we may not be able to achieve profitability, which would adversely affect our financial results and future prospects.

Everything hinges on Uber’s autonomous vehicle strategy:

If we fail to develop and successfully commercialize autonomous vehicle technologies or fail to develop such technologies before our competitors, or if such technologies fail to perform as expected, are inferior to those of our competitors, or are perceived as less safe than those of our competitors or non-autonomous vehicles, our financial performance and prospects would be adversely impacted.

Uber will burn all its cash, and if it can’t raise more, it’s over:

We will require additional capital to support the growth of our business, and this capital might not be available on reasonable terms or at all.

The user data Uber collects can sink Uber if it gets hacked:

If we experience security or data privacy breaches or other unauthorized or improper access to, use of, or destruction of our proprietary or confidential data, employee data, or platform user data, we may face loss of revenue, harm to our brand, business disruption, and significant liabilities.

The operational metrics Uber provides may be fake:

We track certain operational metrics and our category position with internal systems and tools, and our equity stakes in minority-owned affiliates with information provided by such minority-owned affiliates, and do not independently verify such metrics. Certain of our operational metrics are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.

Those billions in losses may go to waste:

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

Pray for acquisitions:

If we are unable to identify and successfully acquire suitable businesses, our operating results and prospects could be harmed, and any businesses we acquire may not perform as expected or be effectively integrated.

Keep out! Vancouver, Canada, is an example:

We may continue to be blocked from or limited in providing or operating our products and offerings in certain jurisdictions, and may be required to modify our business model in those jurisdictions as a result.

The scandals are still dogging Uber:

We currently are subject to a number of inquiries, investigations, and requests for information from the U.S. Department of Justice and other U.S. and foreign government agencies, the adverse outcomes of which could harm our business.

Corruption is dogging Uber:

We have operations in countries known to experience high levels of corruption and are currently subject to inquiries, investigations, and requests for information with respect to our compliance with a number of anti-corruption laws to which we are subject.

You may get totally hosed if you buy the IPO shares:

The market price of our common stock may be volatile or may decline steeply or suddenly regardless of our operating performance, and we may not be able to meet investor or analyst expectations. You may not be able to resell your shares at or above the initial public offering price and may lose all or part of your investment.

You won’t have any say:

Concentration of ownership of our common stock among our existing executive officers, directors, and principal stockholders may prevent new investors from influencing significant corporate decisions, including mergers, consolidations, or the sale of us or all or substantially all of our assets.

Uber may blow all this money it’s raising:

We have broad discretion in how we use the net proceeds from this offering, and we may not use them effectively.

Tesla and Panasonic have frozen their expansion and investment plans for the Gigafactory, after deliveries of Teslas plunged in Q1. ReadCarmageddon at Tesla-Panasonic Gigafactory in Nevada and Shanghai

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

  89 comments for “Uber Discloses 3-Yr $10-Billion Loss from Operations, Stalling Rideshare Revenue & 50 Pages of “Risk Factors” that Are Not for the Squeamish

  1. I can’t stand Uber for many reasons, but they are a passenger-murder away from being out of business. Then one day everyone will say, “Hitchhiking wasn’t a good idea, why did we think Uber and getting into cars with strangers was a good idea either?” Hopefully they go out of business sooner than later, and stop clogging up roads and stopping in the middle of major thoroughfares here in DC to pick up and/or drop off passengers.

    • orange cats says:

      Cab drivers are strangers with as little vetting as Uber drivers.

    • Anon1970 says:

      Not so. Uber has already experienced passenger-murders and it is still in business. https://www.bing.com/videos/search?q=Uber+passengers+murdered&qpvt=Uber+passengers+murdered&FORM=VDRE

      With the aging of the baby boomers (millions are now over 70), there will be a growing market for Uber at current prices. But Uber is experiencing huge losses at current prices.

    • Kerouak says:

      Hitchhiking was and likely is a good idea. Never had any problems when I give people a ride. If you stop watching b-grade horror movies and turn off d-grade sensationalist news, you might meet some interesting people.

      • Wolf Richter says:

        I’ve hitchhiked all over the place in many countries. Had a couple of iffy experiences, but the rest was wonderful. Met the nicest people.

        • Mary says:

          Has your wife ever hitchhiked on her own? My point being that a woman on her own getting into a stranger’s car is facing a world of possible danger. That fact conditions how we respond to coversations like this.

        • Wolf Richter says:


          I agree: Anytime you get into a car with a stranger, you take a risk, and a woman takes a bigger risk than a man. But the driver could also be DUI or whatever. Getting into a car requires a lot of trust. And that trust can be, and is often enough, abused. But my parents died in a Boeing, not in an Uber or hitchhiking. So you never know when or where you run out of luck. And you still go where you need to go.

        • Michael Fiorillo says:

          Yes, and it’s also a way to engage with and learn from people who are very different from you. It’s an immense, varied country, and the people are likewise varied. Hitchhiking forces you to see that.

          I hitchhiked around the US and Canada in my yute, and it prepared me well for dealing with all kinds in later life, and taught an important lesson in seeing how provincial sophisticated urbanites can be, and not just people living miles from Nowhere.

          In fact, it prepared me in such a way that I was not as surprised as most when A Certain Person was unexpectedly elected President in 2016.

          I rarely/never see hitchhikers these days, except ten years ago while on a road trip along the North Coast of California. Though very unlikely, it would be nice to see it return as a more common thing.

    • Seen it all before, Bob says:

      As long as we need cabs, Uber and Lyft will stay in business.

      The cabs are union and extremely regulated. Uber is the Wild West, with little regulation and much cheaper fares.

      I don’t know how Uber and their drivers make any kind of money. A RideShare seems to be a better solution. If I am going to the airport alone on X day, then I would gladly take gas money to share a ride with someone who is doing the same. Uber drivers are kind of doing the same but they expect to live on the gas money. Good luck!

      I take Uber. The technology to call a ride is awesome and it is MUCH cheaper than a cab. I used to have to dig on the internet (or Gasp! in the yellow pages of a printed phone book) to find a cab company and schedule a pickup with no idea when they would arrive or when they arrived. Cab companies would do well to adopt this technology. I take Uber because they are cheaper and much more convenient than cabs.

      And People!!!! If you call a cab, you expect to see a yellow car arriving to pick you up. Uber uses personal cars and most people (and potential axe murderers) don’t have bright yellow cars. Please check the license plate for your Uber. It’s not that hard. If you are so drunk that you can’t see the license plate, call a bright yellow cab to save your life.

      • doug says:

        The best advice I have seen for Uber ride is to ask the driver, who they are there to pickup?
        If they don’t quickly name you, don’t get in….
        Easier than checking license plate, as long as you are sober enough to remember your on name…

    • DeSotoForever says:

      I don’t see why Uber drivers just can’t use the company to find local riders who will take the driver’s phone number to call them for rides and then pay them cash.

      When I drove a cab in San Francisco I had regular riders who would leave a message on my answering machine and I’d drive them to the airport, which was the lucrative run. Eventually I was doing five or six ‘Ports a day which paid my nut and a nice profit.

  2. Albert says:

    Bitcoin …Uber…Bitcoin…Uber..Bitcoin…Uber
    Guess Bitcoin wins out in the lottery ticket investment…
    Has not lost money, does not loose money, has no employees…has no expenses…needs not raise capital….
    Since each one..BTC or Uber shares are a high risk gamble….I will bet my toilet paper fiat USD and buy a few BTC lottery tickets instead of Uber’s lottery shares.
    BTC downside…is zero..upside as crazy as the market takes it..
    Uber downside zero…..upside..hang on let me see how Lyft is doing…

  3. Rcohn says:

    As of last August there were about 60 stocks in the US with a market cap over 100b and 25 over 200b.
    To pay 100b for a taxi company with some kickers is just plain stupid . It will probably be impossible to borrow stock to sell short, so wait until the trades much lower before buying

    • Blockhead says:

      “Wait till it trades much lower before buying”. Great strategy: If and when Uber goes belly up, you will be wiped out at a lower cost than those who jumped in at the IPO.

      • Rcohn says:

        Proceeds from the IPO plus their current cash position will supply enough cash to last at least a few years even with their high cash burn.

        • Jack says:

          You know as much of running a business as POTUS knows of consistency, I reckon!

  4. orange cats says:

    Lots to be squeamish about, my Uber account was hacked when I was in the UK last month, (Capital One caught it straight away)
    but here’s the thing: I love Uber and so do all my friends. Not one of us wants to go back to the days of calling for a cab and wondering whether it will show up, or trying to hail one in the street. We don’t want to go back to paying the driver personally, fumbling with cash and tips and cards and arithmetic. So I will lament the passing of Uber.

    • Max Power says:

      With the exception of very high density cities, Uber will almost always beat taxis becuase car availability tends to be diffused around the city which means getting a car to a rider quickly is easy. Taxis on the other hand, especially in the sprawling US suburbs generally have to be dispatched from remote location which take takes extra time and money.

      • Ethan in NoVA says:

        When I travel I do “arcade tourism” visiting arcades and pinball places. Took an Uber way into the suburbs of Chicago to visit an arcade at a mall. I was nervous I was going to have a hard time getting a ride back, nope took 1 minute for the uber to arrive and take me back to the airport. $70 uber ride IIRC.

        Some people only drive during peak times when the money is better, that is what a friend does. He gets lonely and enjoys it. In DC the metro system (a mess) shuts down early so late night uber/cabs get busy.

    • Old Engineer says:

      In fact, taxi companies could adopt many of Uber’s business models and be more efficient. However, in many cases Uber is exempted from regulations that to some extent limit taxi operations. One analysis I saw says the long term outlook for Uber is that it will be a slightly modernized taxi company because once they put the taxi companies out of service there will be demands to impose the same regulations on them that were imposed on taxis.
      But clearly taxi calling, dispatching, and payment could incorporate the Uber smartphone based approach. You would think taxi companies would be thrilled not having to have their drivers handle the money.

    • DeSotoForever says:

      “We don’t want to go back to paying the driver personally, fumbling with cash and tips and cards and arithmetic..”
      The Horror! The Horror!

      I really want to see what happens to people like you when the ‘Net and power grid goes down. Guess whose coming to dinner?

      • Louis says:

        Cashless payment is safer for the drivers–less chance of robbery–than carrying cash around as traditional cab drivers do.

      • orange cats says:

        “I really want to see what happens to people like you when the ‘Net and power grid goes down”

        Lol. As if people like you are going to be fine.

  5. Javert Chip says:

    Given Uber’s record of a $10B loss, how will markets respond post-IPO if it needs to raise even more capital at these loss rates?

    Unless this turkey quickly shows signs of becoming an eagle, this will be a wild crap-shoot. Definitely popcorn-worthy. Once things settle down (6-12 months), it’ll be instructive to see what the institutional ownership %age is.

  6. David Sokol says:

    Hubert Horan wrote a fascinating 14 part series about the eventual demise of Uber. Well worth the time.

  7. IdahoPotato says:

    “Those billion in losses may go to waste”


    • RagnarD says:

      I’m betting / guessing u only hitched in countries where it is still common, and thus deemed safe, no?

      As far as I can tell, in the USA, with the massive decline in hitching, there has also been a large decline in the quality of the typical hitched.

      But I would think as a hitcher in USA, it would be quite safe – if anyone did it anymore.

  8. Chris Garbor says:

    Will Uber and Lyft use a rape/murder metric for their quarterly earnings conference calls??

  9. Suzie Alcatrez says:

    Even autonomous technology will not save Uber.

    If there is a break thru in self-driving automation tomorrow, where will Uber get the capital to acquire these vehicles?

    Uber will quickly go the way of pets.com, webvan, and kozomo.

    If there are any shorting techniques, I’d love to hear them.

    • Unamused says:

      =>If there are any shorting techniques, I’d love to hear them.

      If you wanted to run a pump-‘n-dump stock flim-flam from the inside, you’d want to keep the ability to short your company’s stock to yourself. So no go bro. Do your own con. This one’s taken. It can’t be that hard, there’s so many of them.

      It’s economically and socially destructive, sure, but it’s not exactly illegal, and many lawyers specialize in explaining that away to the authorities for you. And if that doesn’t work, offer overpaid jobs to the investigators, and be really chummy about it.

      You’ll be glad you did.

      • Rcohn says:

        Nothing illegal or underhanded about shorting. You just have to be a very active connected large trader , who is able to absorb the very high borrow rates( over %100)

        • Unamused says:

          =>Nothing illegal or underhanded about shorting.

          Not anymore, no matter how you do it, depending on your budget for legal expenses.

    • fajensen says:

      If there are any shorting techniques, I’d love to hear them.

      Credit Default Swaps on Ubers debts? Problem is that one needs minimum 10 million, better 100 million USD, because of the “block size” of a CDS and there needs to be some bureaucracy around managing the CDS.

      Personally, I think Uber is more a social engineering scam than a finance one. Uber feeds into Libertarian- and Digital-Econ-Me- bullshit religions and leverages those to do the usual stunts:

      Set up a cash flow, make it flow though many gateways and sub-entities (ultimately controlled by yourself), skim percentages off at every gateway / entity, remember to leave some pennies on the dollars as tips for the gateway operators (bag holders!), remember to pay taxes on the skimmings (nothing to see here, ’tis all above board, guv!), invest your totally legally obtained income conservatively and you are basically Golden.

      What is new with Uber is that careful use of the Internet made it possible to very effectively identify, amplify and target the memes and tropes that attracts a targeted demographic of people to using the business, which generates hype, which then attracts investor money into the scheme.

      We will see a lot more of this type of business and it is metastasising.

      Now we have those stupid ‘electric scooters + app’ everywhere, this will of course never become a better business than Uber but it will still make a lot of money for the instigators. Which is the whole point.

      • Scooter deaths too. Mix one tourist, some alcohol, a rented scooter and an immovable object (tree). Scooters are neither fish nor fowl, too small for the road, too big for the sidewalk.

        • fajensen says:

          Yeah. The accidents will drive traffic on YouTube so there’s something for everyone in Santa’s Sack as they say :).

    • Unamused says:

      =>Uber will quickly go the way of pets.com, webvan, and kozomo.

      And the short-term profits will go through the same laundering process.

      People ask me how Über could possibly burn through $10 bn in so little time, not realising the purpose of executive bonuses.

  10. California Bob says:

    I’m watching gas prices go up* in (already expensive) California by the day and have to wonder how that affects Uber and its drivers? I’ve read that, all expenses including maintenance and depreciation considered, an Uber driver only clears $3-4/hour in compensation (sans tips). At some point, Uber has to raise compensation to drivers or they’re paying Uber to drive for them. Then, of course, Uber’s net revenue decreases. Are gas prices covered in Uber’s CYA statements?

    * close to $4/gal for regular, even at the ‘discount’ stations

    • Just Some Random Guy says:

      ” I’ve read that, all expenses including maintenance and depreciation considered, an Uber driver only clears $3-4/hour in compensation (sans tips).”

      I’m skeptical of that claim. If it were true, nobody would drive for Uber for $3/hr.

      Those “studies” assume a brand new car that depreciates incredibly fast each mile it’s driven. More likely scenario is a 5+ year old car that is on the flat end of the depreciation curve, in which case the expenses are basically gas and routine maintenance. If you’re Ubering with a brand new car, you’re a moron.

      And those figures also count the full cost of auto insurance as an expense. But in reality drivers are already paying insurance on their cars, so it’s not an expense against Uber revenue. I looked into driving for Uber party time and my insurance agent said to add an Uber rider to my policy was $10/mo vs about $225/mo for my current insurance.But in the Uber studies, the full $235 would be counted as an expense for my Uber income, instead of the $10.

      • Michael Fiorillo says:

        Must be lotsa morons (or perhaps just desperate people) out there: virtually every Uber vehicle I see in NYC is a brand new/late model vehicle.

  11. Unamused says:

    Pretty major financial scandal, but there are so many, y’know?

    Maybe if they string it out a little they can make it into the Top 40. Ten bil just isn’t enough to compete at the top level.

  12. Lion says:

    Wolf, reading the article reminds me of a Medical Advertisement for some new drug. A few statements about its miracle cure, and pages of disclaimers about how this new drug will kill you.

    I’ll stand on the sidelines for this one……………..

    • Unamused says:

      Once you’ve lined up your legislative patsies and have your soft-headed audience of millions, ruthless venality can really pay off.

      Everybody’s playing. You should too.

  13. Bobber says:

    At $120B valuation the stock would be trading at over 10x revenues. This implies super high growth, but where will Uber get its growth if it already has 67% market share?

    Also, they need the revenue growth SOON to maintain the valuation. Autonomous vehicles won’t be here for 5-10 years, and even if that does prove feasible, that would only decrease Uber’s costs, not increase its revenues.

    This will be by far the most overpriced IPO offering I’ve ever seen in my life.

    • MC01 says:

      Uber really caught my attention when they introduced Uber Eat… given the insane amount of cutthroat competition in the meal delivery sector even in third rate cities I understood they are already grasping at straws to get more growth right now. Short of hiking prices to increase revenues (and hence put themselves at the mercy of their competitors) I don’t see how they can continue growing at the pace everybody expects.

      Regarding autonomous vehicles… provided everything goes according to plan and provided inflation in the car sector slows down to pre-2016 levels we are looking towards at least €50,000+VAT for the most basic first generation vehicles. By comparison the most bare-bone 2019 Prius is €25,000+VAT. Who will bear those additional costs remains an interesting theoretical question: perhaps Uber will find specialized corporate franchisees like Burger King and Flixbus ready to lay down large sums of money in return for using their app and name (and making very little money).
      I say “theoretical” because there’s always the possibility that by keeping human drivers Uber will be able to undercut autonomous vehicle operators. As Wold said in the past, humans will always find jobs… provided they are ready to work for little enough money.

      • GSW says:

        Eat 24 (merged with GrubHub)
        Munchery (out of business)
        Minibar (delivers booze to your house)

        All of these apps are on my phone currently. I don’t know how food delivery will ever generate tangible margins for Uber, it’s commoditized. Realizing SF probably has some options that the rest of the country doesn’t, this seems to be a crowded category.

        • MC01 says:

          I don’t know how many of those are public companies, but Delivery Hero is as of July 2017, so we have the occasion to have a look inside their financials.
          2017, the last full fiscal year available, saw them lose an unbelievable €190 million. Delivery Hero candidly state they have lost piles of money every single year of their existence, and those losses have grown at an even faster pace than revenues. H2 2018 saw losses increase a tad over 9% on H1 2017 and there our data stop. At last check Delivery Hero stocks stood at €35, proving once again that if share prices are the only measure of economic success Venezuela should be the most booming economy this side of Zeta Reticuli.

          To get back on track, how can a company lose so much money on a service as basic as food delivery? Even with all the advanced gizmoes Silicon Valley can offer it’s not like developing a new aircraft engine or a even a new smartphone. If every single one of the companies on your smartphone lost $10 million in 2018 (most likely a very conservative figure) and excluding Munchery and Eat24 it means $70 million of investors’ money have effectively been destroyed.
          While venture capitalism is always a very risky business, albeit with enormous potential rewards, this is not VC anymore: this is the financial equivalent of filling a multi-story parking building with BMW’s and Lexus’s and setting it on fire.

        • Michael Fiorillo says:

          Those old enough to remember Internet Bubble 1.0 will no doubt have fond memories of Kozmo.com, a long-defunct online delivery service that was also going to Change The World…

          Webvan, anyone?

      • MCH says:

        I would think if anything Uber would buy the vehicles directly and displace the driver. There are contract manufacturers for cars. That said, getting full autonomous is going to take a long time, I would say at least a decade, and likely not before then. The biggest hurdles will not be technological, it will be societal. Think robots and humans sharing the road, that’s just horrifying.

        To succeed, they have to get all the boomers and Xers off the road, and pray the Millennials don’t buy too many cars. This will inevitably bring the Ibees of the world into conflict with all the car companies.

        • MC01 says:

          The technology himself is not bothering me. But I am really intrigued by how these ride-share companies will adapt just to see who will pick up the tab.
          Burger King is the model I have in mind. Their mindless expansion in saturated markets since 2011 has been wholly fueled by corporate franchisees: Burger King now directly owns just 0.5% of their locations worldwide.
          While there are some huge corporate franchisees, running well north of 100 “restaurants” each, the bulk of Burger Kings are run by smaller franchisees running less than ten locations in a given geographic area. These franchisees effectively do the heavy lifting for the Delaware corporation (surprise surprise) in return for thinner and thinner ROI.

          I strongly suspect Uber would eye a very similar model of franchising, but with somehow even thinner ROI for corporate franchisees. And it’s here that the fun start: will we have big financial black holes like Uber surrounded by a small galaxy of smaller financial black holes?

        • Michele says:

          “The biggest hurdles will not be technological, it will be societal.”

          I invision unemployeed, disaffected, former Uber drivers (and others) padding out the interiors of 10-15 yo trucks and large SUVs then deliberating ramming them into the driverless Uber vehicles and running them off the road. People with nothing to lose….

  14. CoCosAB says:

    It looks just like the fracking “business”!

    Just wasting huge quantities of resources which is possible thanks to the never ending supply of almost free (and in same cases free) paper-money.

    QQE/ZIRP/NIRP and so on are the sources of all these non-capitalists corporations.

  15. Harvey Cotton says:

    This comment thread reminds me of Pink Floyd’s “Another Brick in the Wall.” Everybody loves that song, but no one who likes it considers themselves a brick. This I.P.O. is going to generate a lot of enthusiasm from the investing public. Where are those bricks?

    • MD says:

      Jumping on bandwagons, brain-off, has though proved to be very lucrative in this weird new world of ‘momentum’ (ie bigger fool) and cheap borrowed money.

      Those that displayed any prudence or indeed, good sense, have lost out badly it can’t be denied.

      What this means for the human race going forward – rationalism not needed, just boundless, child-like ‘positivity’ – is anyone’s guess; that’ll depend on how much more money printing/debt creation is enabled to continue to support the reckless speculation…

    • MC01 says:

      I’ve never liked Pink Floyd. Listening to The Dark Side of the Moon is 42 minutes of my life I’ll never get back and I confess I may have dozed off for the duration of a song or two.
      Yes, I know I have a horrible music taste. ;-)

      • Harrold says:

        You can never appreciate Pink Floyd unless you have spent at least one dreary, cold, and wet winter in England

        • MC01 says:

          Intriguingly enough that’s the only place in the British Isles I did not study. Wales, check. Scotland, check. Ireland (both sides of the border), check. England… only landed at Gatwick and Heathrow and hopped on a train.
          But I did spend a night in central London in June in a hotel whose A/C failed at 11PM during a heat wave.

        • Just Some Random Guy says:

          Rule #1 of A/C units: They always fail during a heat wave

      • 91B20 1stCav (AUS) says:

        MC01-glad to see you resurface, and as I know you’re someone who knows and appreciates the music of the late, great Stan Rogers (sublime raconteur of a fast-vanishing era and population of flesh-and-blood humanity), your taste is just fine (…and,I don’t dislike PF, but can take or leave ’em…)! A good day to us all, and like the Mary Ellen Carter may we rise again…

  16. Lance Manly says:

    I love the idea of booking a 2B on unrealized investment gains. Do they book the loss if those gains go away before they are realized?

  17. MD says:

    Crazy figures to match a crazy, financialized world that appears to work only on the ‘bigger fool’ principle of rampant speculation.

    Still – JOBS, JOBS, JOBS, eh?

    Profits are sooooo 20th century!

  18. TruckMan says:

    My brother is a London Black Cab driver, who tells me his business (they are all self-employed) hasn’t suffered at all since Uber, etc, arrived. He offers a safe, fast, quality service which he spent 4 years training to provide. Lots of people are still prepared to pay for that.
    He ‘ad that Bob Geldof in the back of the cab the other week (really), still swearing ‘is ‘ead off ;)

    • GSW says:

      NYT did a fascinating feature a few years ago on London cab drivers and how they study and train for that test. It’s called The Knowledge, I think.

      In SF the cabs stunk which allowed Uber to take off in the first place; now it has come full circle where the streets are clogged with out of towners who drive in from Stockton or Fresno for a weekend and have no clue which lights are timed, easiest points from A to B. If the map doesn’t update for them they just don’t turn or I end up telling them what to do.

      If we could get a mid point between London cabbies (top of the line service but premium prices), and completely outsourced drone-like drivers that are cheap but have no knowledge of where they are driving, it would be nice.

      Like if you drive an Uber/Lyft you should have to pass a basic test showing you know the major routes in and out of where you’re driving. Not the back alleys per se, just the basics. When I say “can we take 280 instead of 101?” I shouldn’t be looked at like I just offered a calculus problem.

      • Guido says:

        Driving for Uber anf Lyft is very tiring work. If the person had more mental fortitude and were capable of absorbing knowledge, this said person would have found a higher paying job. After all, this is the Bay Area you are talking about and there’s a huge shortage of software developers.

        • Eisel says:


          >If we could get a mid point between London cabbies (top of the line service but premium prices), and completely outsourced drone-like drivers that are cheap but have no knowledge of where they are driving, it would be nice.

          In UK that’s provided by hire cars. You have to book them in advance (which nowadays you can do by your smart phone at the conference/on the train)

          I uses to do that on a run out if london half a dozen stops before book the car(for arrival time) straight out the train on to car continue journey in comfort with screened driver

          Cheaper than a taxi and more premium than uber. I rarely needed them on London unless carrying something heavy. Do you not have hire cars in

  19. Just Some Random Guy says:

    I don’t use Uber often. I own cars at home and when I travel I rent a car most of the time. The only time I need a car service is airport rides.

    The thing I liked about Uber when it first came on the scene was the price. It was dirt cheap compared to taxis. From my house to the airport a taxi was $55-60, Uber was $40. Awesome! Well that lasted for a while and then prices started going up and now the price between uber and a tax is about the same.

    It’s still a better experience than a taxi, but it lost its main selling point to me. And if pricing exceeds taxis, I’m going back to the checkered cabs.

  20. BostonBobby says:

    I’ve done work on autonomous vehicles (cars/trucks, boats, and UAVs) at MIT (mostly under US Military contracts). I’ve also spent a massive amount of time working on general AI, computer vision, and LiDAR/Radar data processing. Let me tell you straight up – self driving cars are non-sense. If there are ever self driving cars of the type capable of what Tesla was promising, they are probably at least 40-50 years off. Personally, I do not think they will happen with in the next 100 years… if ever. Uber’s contractor/employee costs (and problems) are not going away.

    • Wolf Richter says:

      In Phoenix, you can already hail a self-driving Waymo. It’s not perfect. And there are plenty of glitches to work out. But if you live in Phoenix, you can already try it out with Google’s “Early Rider Program.” So I doubt that we will have to wait “at least 40-50 years,” as you said.

      • Rcohn says:

        My understanding is there are backup drivers in all of the Waymo “self driving “cars. Please provide any links describing truly self driving cars that do not have any backup drivers.
        Don’t know if you ski, but would you ever use a self driving car to go through the Donner Pass during a light snow storm?
        The problem with truly self driving cars is that they need to react not only to common everyday driving conditions, but also to those situations that happen very infrequently , but are inevitable.The machine learning ability to do this is far beyond current capabilities . Maybe self driving trucks on relatively deserted highways in the middle of the country , but not in crowded cities or on dangerous roads.

        • Wolf Richter says:

          All these cars are prototypes, though many thousands of them already exist. “Disengagement” (when the safety driver takes over) differs from company to company. In 2018, at Waymo, in California, the average disengagement rate dropped by half to 0.09 per 1,000 self-driven miles in 2018 (or 1 disengage per 11,017 miles self-driven), as these vehicles drove 1.2 million miles in the state in 2018 in self-driving mode.

          So this is just in California where this type of disclosure is now required. These cars are tested in other states too, including bigly in Arizona.

          When you look at the progress that has been made over the past five years, it’s enormous.

          Here is Waymo discussing this:


          Human drivers should have a safety backup driver as well. Human drivers kill 36,000 people a year in the US and severely injure millions of people. Human drivers are on average so bad that it’s not hard to come up with something better.

          The problem is that it has to near-perfection because the first person that got killed by a self-driving car made the global news, while human drivers in the US kill a 100 people every day, and no one gives a crap.

          So this is will be a moral issue more than a technical issue. We’re OK with people getting massacred by the tens of thousands every year in the US by human drivers. We’re not OK when a machine on its own kills just one person. Overcoming that will be a key challenge.

          And don’t talk to me about humans being able to drive at night or in a snowstorm or in a hard rain. Look at the accident statistics when these conditions occur. Humans on average are terrible drivers under good conditions. And when conditions get difficult, humans are a lot worse than just terrible. Human drivers should also have an expert backup-driver; and there should be someone that just plainly doesn’t let humans drive. Same as self-driving cars ;-]

      • drg123 says:

        Wolf, you’re going to be disappointed. Google likes to talk about how “our cars have driven themselves over 100 billion miles” but nearly all of these miles have been on the roads around their campus in SV, which are heavily augmented with additional sensors.

        It might not be 50 years, but it sure as hell is going to take a long time before driverless cars can impact the Uber bottom line.

        BostonBobby is right.

        • Wolf Richter says:


          “…nearly all of these miles have been on the roads around their campus in SV…”

          Nope. Your ideas are about 7 years out of date. As I said above:

          In 2018, Waymo vehicles drove 1.2 million miles just in California in self-driving mode. These cars are all over the place, and I see them right here in SF.

          Under California law, companies must disclose this data for California. That’s why we know. But they’re doing this in other states as well.

          In 2018, during these 1.2 million miles driven in California in self-driving mode, Waymo cut the average “disengagement” rate (when the human driver takes over) by half from 2017, to 0.09 per 1,000 self-driven miles in 2018 (or 1 disengage per 11,017 miles self-driven).

          You can check out the link I posted above.

    • TruckMan says:

      Thanks Bobby, that’s what I thought.
      Worth remembering that, in the 1950s, flying cars were 10 years away and fusion power stations were 30 years away.
      In the 1960s, flying cars were 10 years away and fusion power stations were 30 years away.
      In 2019, they are both still those times away.

      • BostonBobby says:

        This really is a repeat of “flying cars”. That’s a great analogy. Flying cars for the masses will never exist due to the simple fact that the amount of energy it takes to lift a 2 ton car off the ground is cost prohibitive when compared with the amount of energy it would take to roll a car along a street. We already have “flying cars” – they’re called Helicopters and only the super rich can afford to use them.

        I do think cars/trucks will have an “auto-pilot” mode for use on highways and other extremely well maintained and regulated roadways (pedestrians aren’t allowed on highways). But, a car or truck that can drive some highway miles before a human has to take over an drive it through city streets is very different than a “self-driving” car that will displace Uber drivers.

        However, even on highways these experimental vehicles have significant problems. There is a famous video of a Tesla nearly ramming itself into a concrete lane divider due to lane marker paint having faded. This isn’t a question of a “glitch”. It’s a design limitation in the technology used. All computer vision systems use a technology (mathematical process) called thresholding to help the system see objects and demarcations (like lane divider lines). This thresholding technology will never be able to deal properly with badly faded, mistakenly placed/incorrect, or missing lane demarcations. Beyond the ability to see the lane markings as an issue, there is also a basic science issue with the type of AI used. If a human can’t see a lane demarcation, I can imagine no scenario where their course of action would be to ram their vehicle into a concrete barrier at 65 mph. To address this issue would involve a complete change in the type of Artificial Intelligence in the vehicle (and developing a new type of Artificial Intelligence all together).

        Aside from the technology problems that current vehicles are experiencing there will be new problems surfacing as more of these vehicles come onto the roadways. Currently nearly ever one of these vehicles uses one of two types of LiDAR device developed by a company called Velodyne (the HD23e or the HD64e). These devices both work by broadcasting either 904 nanometer or 1550 nanometer infrared light. The way a LiDAR works is that it broadcasts out a beam of light and measures the amount of time before it bounces back. If a beam comes back more quickly than other beams it means that beam hit an object (like another car or pedestrian). This works just fine when there’s one device. Now image an entire roadway full of them. Did the light beam your car picked up come from your car or one of the others? Image driving down a curvy two lane highway at 65mph with no median divider and packed with cars at night – no problem. Now image that everyone has their brights on and they’re 10x brighter than those super bright annoying Toyota highlander brights. How well will you be able to navigate that roadway and see the upcoming turns in time?

        Finally, Americans (and others) are already moving to used vehicles because the price of new vehicles is insane. Some new pickup trucks cost more than a home. Imagine trying to develop a sufficient market for self-driving cars with $60K of LiDAR equipment on them, $40k of computer equipment, $12K of camera equipment, $3K of Radar Equipment, etc. Tesla is already struggling with viability as a car company due to Li battery costs. Costs on self-driving car components will come down some with volume. But, they won’t come down dramatically because we’re talking about precision electronics with complicated manufacturing processes, extensive quality control, difficult engineering, and often expensive raw materials.

        There are self-driving cars operating in Boston as well – currently essentially limited to Black Falcon Terminal (a mostly empty shipping terminal near South Station). I don’t think that means much from an investment/economics perspective. I don’t think you’ll see them in the next 50 years on all Boston streets. We had a self-driving golf cart in service on the MIT campus for a bit, too. I heard that got canceled due to expense and disinterest on the part of the student body. Every time I saw it while walking across campus, a student was driving it.

        A good way to know when self driving cars are getting closer is when you see things like city subway systems, Amtrak trains, and freight trains, that are self driving. Tracks are clear (underground or protected by fencing), little to no steering is needed, and additional sensor can be added to communicate things like where to stop. Trains are the easiest thing to automate. No one is even talking about automating trains, right now.

        • Wolf Richter says:

          “A good way to know when self driving cars are getting closer is when you see things like city subway systems, Amtrak trains, and freight trains, that are self driving.”

          There have been self-driving train systems for years. When you take a subway, you might not always know it unless you read the signs. For example, in 2011, I took the subway from the airport in Nuremberg, Germany, to the main railroad station (Hauptbahnhof). There was no engineer, driver, conductor, or any other employee of the subway on board. Just passengers. Kinda spooky. But it worked just fine. These systems are being rolled out everywhere.

        • Wisdom Seeker says:

          Wolf, the only autonomous trains I’ve seen were monorail loops or there-and-back-in-a-tunnel systems.

          Has anyone been on an autonomous train system that had to handle multiple trains, traffic or pedestrian crossings, or anything that would actually require a capable AI?

  21. Chester Hazelwood says:

    There’s a rich vein of suckers out there and they have billions! The Uber folks should take that six billion, etc. and buy their own stock then short the hell out of it. It’s a fugazi. It’s a great opportunity!

  22. andy says:

    With so much money Uber can immediately start share buybacks. It’s only logical.

  23. Chris says:

    Is there a lock-down period before the market can either short or buy puts in Uber?

    While from a business perspective the company has growth potential, I really think that any valuation that isn’t down to earth will implode. IMHO

    • Rcohn says:

      I believe that puts cane out on LYFT about a week after the IPO.
      Probably expect the same on any UBER.But expect that the price of puts to be sky high

  24. Tim says:

    Maybe it’s different in the US, but every car insurance policy I’ve ever had here in Europe has been for private use only, with specific exclusion of any taxi-type activity.

    In Britain, for instance, breach of this doesn’t leave you completely uninsured, but does reduce you to the absolute legal minimum, which is coverage of liabilities to third parties – so, wreck your own car whilst carrying a paying passenger and you get nothing.

    I doubt if Uber covers this risk for its ‘contractors’ – but if not, what happens?

    • Just Some Random Guy says:

      Drivers can add ride-sharing riders (no pun intended) onto their personal car insurance. I looked into it from my insurance company and it is $10/mo.

      Now that doesn’t mean every Uber driver buys it, most probably don’t. But it is an option.

  25. Angry says:

    This whole act of going public is nothing but a bailout of existing investors. The “risk takers” need a bailout and Wall Street is prepared to transfer the risk to a bunch of pensioners who worked hard to earn their pension. The pension managers will buy this loser with pensioner money and when the pension fund cannot pay its obligations because of lousy management, no one will be around to suffer but the innocent workers. This whole thing is a scam.

  26. polistra says:

    Uber has crossed a new frontier. Until now the Sucker Filter was only used by dubious email rackets. Now, for the first time, it’s used openly by a giant corporation.

    Sucker Filter = Advertise clearly that the operation is a total scam, and that you are guaranteed to lose money by responding to the scam. This saves effort for the scammer, who doesn’t need to waste time cultivating sensible people. He can immediately home in on the perfect fools who are eager to lose everything.

  27. Dave says:

    Anyone live in NYC in the late 90’s and remember Cosmo and Urban Fetch? I heard Cosmo founder ended up with nothing at the end of the ride. Similar story to MySpace or Globe.

    Really, Cosmo started the whole movement of convenient delivery to your door in under an hour. I heard they expanded into other markets in the burbs and the model just didn’t work outside of NYC. Oh man, I get nostalgic about those days of ordering ice cream and movies (VHS) to my door. That was the first time I started using the Internet too. Seeemed like Cosmo would take over the world. He was just too early in his idea. Timing is everything. Had the idea before the technology needed to make it work (apps and smartphones, maps, GPS etc.)

  28. sierra7 says:

    UBER: The “American rickshaw” company!

  29. nick kelly says:

    The plan that will end Uber and Lyft as multi-billion dollar ‘tech’ companies is well underway in Quebec, Canada.

    The answer is simple: the province is about to make the taxi business like any other business. It will end the bizarre requirement to purchase a taxi ‘medallion’ (the legal right operate a taxi) in the private market and let anyone meeting basic criteria do so. At the moment they are negotiating compensation for the medallion holders: current offer 500 million.

    The whole reason for Uber’s existence is the completely artificial shortage of taxis and the consequent high cost.

    I expect knowledge of this blindingly obvious breakthrough in Quebec to spread like Galileo’s proof that heavier objects don’t fall faster.

    No doubt be able to hail a cab from one of these companies with your smart phone so they too will be ‘tech’. But they won’t be worth billions.

    Quebec’s move will indeed lower the barriers to entry.

    • char says:

      In a medallion system the medallion works as a bond so taxi’s won’t charge $500 for a $10 drive. In an open market that will happens regular so people will shay away from taxi’s. This is not a situation you want to be in as city.

Comments are closed.