Uber -- a bezzle -- projected $8b in losses this year; but it lost more than $5b in a single quarter, and despite an initial stock price rise (dead cat bounce?) the company's shares have tumbled by more than 10% since, hitting an all-time low. Engineers who were scheduled to interview at Uber have had those interviews canceled by the company's HR department, who told them the company now has a tech-worker hiring freeze. (Image: Tarcil, CC BY-SA, modified) (via Naked Capitalism)
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Uber says it can be profitable someday: all it needs to do is corner the "total addressable market" for all transportation and food delivery, which will give it $12t in annual revenue, which is 15% of all global transactions.
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By Facebook's own admission, more than 10 billion of the 12 billion Facebook accounts ever created have been fake; Facebook's growth has stalled out in high-income countries like the USA (where the company is actually losing users), and the majority of growth the company posted in 2018 came from "India, Indonesia, and the Philippines," which also happen to be places where Facebook says it has "meaningfully higher" rates of fake account creation, exacerbated by "episodic spikes" of fake accounts.
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Bird Scooter really is the Uber of scooters: vastly overcapitalized, vastly overvalued, incapable of turning a profit...ever.
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Veteran transportation economics Hubert Horan has consistently published the best-informed, deepest critiques of Uber and Lyft, explaining how the companies can never, ever be profitable, and warning investors away from becoming the "greater fools" that allow Uber/Lyft's early investors to cash out at their expenses, while cataloging the many ways that Uber and Lyft's legislative strategy, coupled with predatory pricing, is destroying the cities they operate in.
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Uber is a wildly unprofitable company with no conceivable path to profitability in any universe, under any circumstances, but the company's founders and early investors (having already taken massive write-downs on their investments) are hoping to get at least some of their money back through the time-honored "greater fool" methodology. Specifically, they're floating the company on the stock market and hoping that naive investors hoping to wring above-inflation gains out of their 401(k)s and avoid being made into dog-food in their old age (we're waaaaay past the era in which impoverished old people get to eat dog-food) take their shares off their hands.
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Writing in New York Magazine, Naked Capitalism's Yves Smith draws on Hubert Horan's outstanding series on the underlying economics of Uber to describe why the company's IPO will be a terrible bet for the investors who buy into it.
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