Amazon v the new cash burning tech megacaps

[gzz]

Really great charts in this article:

Today’s Unicorns Have Bigger Cumulative Losses than Amazon, Lost Money far Longer than Amazon, Still No Turnaround

He’s an inflation doomer too!

[scaredyclassic]

I’m interested in how a company like Uber loses money. Isn’t it just a computer moneymaking machine? Where does the money go?

[gzz]

They cost half the price of a taxi, sometimes less.

[scaredyclassic]

If they charged market price, wouldn’t people still Uber v. A taxi?

[barnaby33]

Ubers fundamental problem is that it can’t change the fundamental problem, of cost of transport. It was cheap because it was subsidized. Sadly that has gone away for the most part.

[utcsox]

[quote=barnaby33]Ubers fundamental problem is that it can’t change the fundamental problem, of cost of transport. It was cheap because it was subsidized. Sadly that has gone away for the most part.[/quote]

Is this true? If the robo-taxi concept can become a reality, then the cost can dramatically reduced. I think both Uber/Lyft are betting on this…

[gzz]

I would still take Uber instead of a taxi if the price were the same, except if there’s a waiting taxi at a stand.

However, a lot of my Uber use was replacing driving, not replacing a taxi. For example, I can park at SAN or ask someone for a ride, but when Uber cost $9 from OB it was the best option.

I also took Uber from SFO to SF many times for as little as $20. If Uber cost the taxi $65 amount, I might just take BART instead for $9.

I really do like the company a lot, and wish it wasn’t unsustainably unprofitable.

[gzz]

I purchased a few lottery ticket $105 puts for COIN, they cost $150 each.

[barnaby33]

Here you go utcsox Uber business model. Perhaps a bit old but nothing has fundamentally changed.

[gzz]

Recently I encouraged my GF to try Lyft for the first time on what is normally a $10-15 ride from SAN to OB. Instead they quoted her $44. So I just picked her up.

Last time I took a taxi it was about $18 for this route.

Strangely, I checked for a bug and looked at the cost to go to the airport, and it was a normal $16.

Maybe losing half their business and charging luxury prices is the way forward, but the size of that market is a lot smaller.

I am short Uber and Lyft both even though I am generally a fan of both and would prefer they succeed. I just doubt they will.

[carlsbadworker]

I don’t think Uber ever can make money…unless it invents self-driving car. It’s just math.

However, I think it is unfair to compare Amazon cash burn with today’s tech cash burn. In Amazon days, Internet just started to grow, so there isn’t many Internet users…it takes years for Amazon to get 1 million users (which was a big deal back in 1997). Today, tech grows at much faster pace, given most business has higher upfront costs to acquire a customer, their corresponding higher cash burn could be a positive rather than negative sign.

[barnaby33]

Utcsox, fresh off the presses! Part 27, PR as a business model!

[gzz]

Even though I am short UBER and LYFT, I am not quite so bearish as Naked Capitalism.

I don’t see why they can’t eventually make a bit of money by raking in 5-15% of taxi charges in return for providing dispatch services and mutual rating of both drivers and passengers that makes both the riding and working aspects safer and better.

Their shared ride system also worked pretty well, but its market isn’t as large since you need a decent density of users, which doesn’t exist in at least half of their regular market.

In other words, I think Uber creates a ton of value compared to taxis, and that amount will increase over time.

The problem, however, is they their insane overvaluation compared to the eventual value of any profits they make.

I like the chart the link in my OP because it nicely shows just how much of an outlier Uber is, having now lost more than $20 billion, compared to under $3 billion for Amazon at its lowest point.

[barnaby33]

gzz, I do think Uber has a future. Just not the future Uber thinks it has. It’s a ride sharing business. It’s cost basis and pricing need to be determined as such. It is not an autonomous driving company. It’s ridiculous cash burn came about from trying to be both.
Josh

[Hatfield]

The one I don’t understand is Airbnb. How can they possibly still be losing money? Unlike Uber, they’ve never subsided the product.

The host sets pricing. Airbnb charges guests appx 14% on top of that. The host pays 3% for credit card processing, so Airbnb even makes a couple bucks there. And for that, they maintain a website and have a bunch of (but not nearly enough) customer service reps, mostly offshore.

They’re basically running a hotel, except with none of the overhead & maintenance and probably higher gross margins. Where the hell is all the money going?

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