I don’t get invited to any of the glitzy Uber soirees. No open bar for me. This is because I don’t drink and I do ask questions. Had I been invited I may have asked about an Uber IPO and it’s recent 1st quarter ‘earnings’
Instead, I am the misfit talking bad about Uber behind its back
Uber’s reported “profit” was entirely due to a one-time, $2.94 B gain on the hopelessly unprofitable operation Grab sale.
How is it that the sale of a could generate a $2.94B accounting “profit”?. None of this “profit” had nothing to do with the exchange of assets where the underlying value had ever been audited or based on exchanges in public markets.
It’s smoke. Tech journos and propagandists ( #FakeNews ) are the mirrors.
None of the faithful reporters socrates’ized that making a (roughly) half-billion P&L improvement (aside from the Grab accounting benefit) in a single quarter, if true, would be a major story in itself, and didn’t explain how this was achieved.
Indeed, the miracle appears to have come from a $280m cut in driver compensation vs the 4th Q (drivers getting less and less of what passengers actually pay–a piece of the Uber story that every major outlet ignores) and a $277m cut in G&A and Depreciation expense.
Most stories mentioned the Uber IPO hopes for 2019, but none attempted to explain whether the 1Q data points toward the narrative Uber will need to gain a strong public valuation.
“We are no longer losing a billion dollars a quarter” may be better news than the alternative, but neither Uber nor these reporters can explain how or when Uber might achieve breakeven, much less the sustainable profits investors will need to see. Dara Khosrowshahi has publicly stated that he expects Uber to grow to 20-30 times its current size, and that Uber’s driverless car “flying car” programs are critical to achieving those growth targets. But all of the things that drove the Quarter-over-Quarter P&L improvement directly undermine that “growth narrative.”
Much of the huge G&A/Depreciation cuts were related to reduced spending on future growth. Any company can goose current earnings if they stop spending for the future, but this is not what potential investors in Silicon Valley “growth companies” want to see.
Most stories quoted Khosrowshahi comments about growth exceeding expectations, but none noted that the quarter-over-quarter growth in gross passenger payments was only 4%. Some of the stories mentioned the termination of driverless car testing in Arizona, and the recent departure of the head of Uber’s flying car project, but no one attempted to explain how any of these facts could be consistent with the company’s aggressive growth objectives.
Obviously, the idea is that “growth companies” can use the strong profits and cash flow from their core business to fund a variety of longer-term growth opportunities.
The reporting on Uber still ignores its awful year eight economics in its core businesses, and that its hope of eventually earning money in driverless and flying cars is even more inexplicable.
H/t Horan
I don’t get invited to any of the glitzy Uber soirees. No open bar for me. This is because I don’t drink and I do ask questions. Had I been invited I may have asked about an Uber IPO and it’s recent 1st quarter ‘earnings’
Instead, I am the misfit talking bad about Uber behind its back
Uber’s reported “profit” was entirely due to a one-time, $2.94 B gain on the hopelessly unprofitable operation Grab sale.
How is it that the sale of a could generate a $2.94B accounting “profit”?. None of this “profit” had nothing to do with the exchange of assets where the underlying value had ever been audited or based on exchanges in public markets.
It’s smoke. Tech journos and propagandists ( #FakeNews ) are the mirrors.
None of the faithful reporters socrates’ized that making a (roughly) half-billion P&L improvement (aside from the Grab accounting benefit) in a single quarter, if true, would be a major story in itself, and didn’t explain how this was achieved.
Indeed, the miracle appears to have come from a $280m cut in driver compensation vs the 4th Q (drivers getting less and less of what passengers actually pay–a piece of the Uber story that every major outlet ignores) and a $277m cut in G&A and Depreciation expense.
Most stories mentioned the Uber IPO hopes for 2019, but none attempted to explain whether the 1Q data points toward the narrative Uber will need to gain a strong public valuation.
“We are no longer losing a billion dollars a quarter” may be better news than the alternative, but neither Uber nor these reporters can explain how or when Uber might achieve breakeven, much less the sustainable profits investors will need to see. Dara Khosrowshahi has publicly stated that he expects Uber to grow to 20-30 times its current size, and that Uber’s driverless car “flying car” programs are critical to achieving those growth targets. But all of the things that drove the Quarter-over-Quarter P&L improvement directly undermine that “growth narrative.”
Much of the huge G&A/Depreciation cuts were related to reduced spending on future growth. Any company can goose current earnings if they stop spending for the future, but this is not what potential investors in Silicon Valley “growth companies” want to see.
Most stories quoted Khosrowshahi comments about growth exceeding expectations, but none noted that the quarter-over-quarter growth in gross passenger payments was only 4%. Some of the stories mentioned the termination of driverless car testing in Arizona, and the recent departure of the head of Uber’s flying car project, but no one attempted to explain how any of these facts could be consistent with the company’s aggressive growth objectives.
Obviously, the idea is that “growth companies” can use the strong profits and cash flow from their core business to fund a variety of longer-term growth opportunities.
The reporting on Uber still ignores its awful year eight economics in its core businesses, and that its hope of eventually earning money in driverless and flying cars is even more inexplicable.
H/t Horan