Is Uber a successful business?

The Coffee Shop
22

Well, what Uber is first to market with – and best to market with – is the web-based platform to ask for a ride.
I’m not sure it matters what company makes the first self driving car. Uber will just purchase those cars or will contract those cars. Soon those cars will be commonplace.

I’m not sure that Uber is any better than Lyft?

I think it’ll certainly matter which company makes the first self-driving car. There’s an incredible amount of intellectual property that goes into it. Whoever can sell or license that first, is going to be a very, very valuable company. Sort of like Google licensing Android to phone manufacturers. Only more so. And I don’t think it’s going to be all that soon. All the companies trying it are running into problems. No one’s very close at the moment, including Uber. Though “soon” is subjective. So is “autonomous.” I predict we’ll see gradual insertion of the technology, but nothing like a true all-purpose replacement for a driver before around 2025.

23

I’m not sure that Uber is any better than Lyft?
Yeah, Lyft is a close second, and probably has a market value that corresponds to that (good) position.

I think it’ll certainly matter which company makes the first self-driving car. There’s an incredible amount of intellectual property that goes into it. Whoever can sell or license that first, is going to be a very, very valuable company.
Yeah, it will matter to that company. I’m just saying that Uber and Lyft don’t need to be the first one to make a self driving car. Just like they didn’t need to be the first company to make a human driven car. They just need to employ that technology when it becomes available. The value of Uber isn’t so much based on the belief that they’ll be the first to market with a self driving car.

Sort of like Google licensing Android to phone manufacturers.
Yes, and in this case Uber is like a wireless carrier, not a phone manufacturer. They’ll need phones, but their product can be made to work with any.

24

Others have explained it but the way I look at it there are varying motivations. Some people are selling a dream and start a business and get out as soon as the stock price is high enough and they can cash out for a big profit. Maybe get swallowed up by Google because Google doesn’t want the competition getting the idea. Some people want to get in early and will wait until company is selling a product making money and get out then. Some people are driven by an idea above all else and the money is a vehicle to make it happen. Elon Musk appears to be that guy. I don’t think he ultimately is in it just for the money he wants to make electric cars. Not only that he looks upon his electric car business as a vehicle to finance his rocket business. Little investors are along for the ride. Many times they get burnt. Think Blackberry or Nortel two Canadian examples. Alot of ordinary people bought stock at very high prices and lost almost everything. Other people are not interested in all the risk of the above and buy mature profit making companies without much potential for growth but little risk.

Someone put up a graph about Amazon. I was surprised that lately its profit is going down. They seem to be pretty close to a mature company. There is still potential for downside. The other thing is Amazon is not doing something no one else can do. They are just doing it better for now. Think Walmart they are not growing and are getting cut into by others.

25

Is Amazon gunning for a monopoly in retail? Honestly. It seems like their only goal is to be the only one selling.

26

Someone put up a graph about Amazon. I was surprised that lately its profit is going down.

If you’re talking about the above, that graph ended in 2014. In Q1 2017 Amazon had ~13.2B quarterly gross profit on revenue of $35B, all while sinking billions into R&D, and continuing to grow rapidly.

That’s slightly down from ~$14.2B progit in Q4 2016, but that was an all-time high. And the trend over the past 2 years looks a lot like a path to world domination.

That’s actually a good example for Tibbs on why it might have been a good idea to buy Amazon stock back around 2014 when it wasn’t turning a profit. It was $300/share at the end of that year. Now it’s around $1000/share. Tripling your money in around 3 years isn’t bad.

27

Good thing I have professionals managing my money!

28

Look up pets.com, webcam.com, global crossing, etc

Some examples that are not Amazon, tesla, and Microsoft
.

29

Well, what Uber is first to market with – and best to market with – is the web-based platform to ask for a ride.
I’m not sure it matters what company makes the first self driving car. Uber will just purchase those cars or will contract those cars. Soon those cars will be commonplace.

In the near future it may not be necessary for anyone to actually own a car . . . when you need one, you call (ie an Uber) and the car shows up, takes you where you want to go, then car moves on.
No more garages and no more on-street parking - no more parking lots - except offsite to stay excess cars.
No more parking or looking for a space!

30

Uber just seems to be unsustainable. It appears to be just bleeding cash for no real future.
Certainly appears that way.
They are banking on autonomous cars becoming reality relatively soon.
Question is, how long can they continue to run at a loss (regardless if that money is used to fund growth or R&D, negative cash flow is still negative cash flow and it has to come from somewhere) before the funds dry up?

31

My understanding is that a successful business is one that makes maximum profit with minimum debt. Now from what I am reading Uber losses a ton of money and has 4 billion in debt. If it is not a profitable company so why do people pour money into it? Since it is being shown not to be a good business shouldn’t people be running from it? If Uber is too much of hot button for you plug any Amazon.

Finance background here:

I’m assuming your wondering why the stock price is going up. Answer is growth.

As long as the company is either growing, or more profitable than the prior quarter, the stock value is justified to go up. Now, reality doesn’t always reflect the market, so I say it’s justified to go up, not it will go up.

P/E ratio reflects the Price of the stock/ Earnings. Higher this number means, investors are paying a larger amount for a stock than its actual earnings justify- only rational explanation is growth. Thus, if a company has a rising stock price and not rising earnings, growth is the reason.

Here is the problem, the minute growth slows, there will be a sell-off. P/E ratio will collapse and stock price will fall.

Now, I passed up Facebook and Amazon years ago for this fear. Although, either of those would have generated big returns. We just don’t know how long until the growth stops. Disclosure- I have not followed Uber and I don’t know their financial ratios.

32

thank you
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33

Here is the problem, the minute growth slows, there will be a** sell-off**. P/E ratio will collapse and** stock price will fall**.

That’s kind of circular logic. Since a sell-off is nearly by definition, a fall in stock price.

Though that scenario is not a given. It’s perfectly possible to smoothly transition from “growth” to “income”. As growth slows companies can divert less money from “E” into funding growth (capital purchase) and R&D, and hand it back to investors, increasing the dividend and therefore propping up the stock value. There are plenty of companies that do this successfully. (And plenty that don’t.)

34

The

Here is the problem, the minute growth slows, there will be a** sell-off**. P/E ratio will collapse and** stock price will fall**.

That’s kind of circular logic. Since a sell-off is nearly by definition, a fall in stock price.

Though that scenario is not a given. It’s perfectly possible to smoothly transition from “growth” to “income”. As growth slows companies can divert less money from “E” into funding growth (capital purchase) and R&D, and hand it back to investors, increasing the dividend and therefore propping up the stock value. There are plenty of companies that do this successfully. (And plenty that don’t.)

Circular logic… implied since they are the same thing- yes.

Sell-off means a fall in stock price. A new calculation of the P/E ratio after the fall in stock price would mean the P/E ratio would also fall.

Companies that have high P/E ratios have that due to one thing or the other, growth or earnings (profit). 4 key numbers at every quarterly report are: earnings and sales from that quarter ended (profit and growth), and the expected sales and earnings for the upcoming quarter (profit and growth).

Based on these figures- a stock valuation is calculated. Trading of the stock occurs and adjusts. That is why there are big moves up or down after earnings reports.

Now, valuations and reality are two different things. That is why we call a stock “undervalued” or “overvalued” when the valuation is compared to the current stock price. A stock that is valued at $80 a share and is actually trading at $100 a share is overvalued and vice versa.

To keep stock price up, yes, there would need to be a change in earnings (profit) when growth slows. Also, yes, when a dividend is offered, that is also taken into account when valuing the stock. Higher the dividend, then the higher the stock valuation.

Normal transition would be- growth for a new company, then it changes to a dividend paying company when the growth slows and positive earnings are present.

35

Some companies are about the anticipation of profits and others -typically mature companies- are more about actually making profits.

36

Others have explained it but the way I look at it there are varying motivations. Some people are selling a dream and start a business and get out as soon as the stock price is high enough and they can cash out for a big profit. Maybe get swallowed up by Google because Google doesn’t want the competition getting the idea. Some people want to get in early and will wait until company is selling a product making money and get out then. Some people are driven by an idea above all else and the money is a vehicle to make it happen. Elon Musk appears to be that guy. I don’t think he ultimately is in it just for the money he wants to make electric cars. Not only that he looks upon his electric car business as a vehicle to finance his rocket business. Little investors are along for the ride. Many times they get burnt. Think Blackberry or Nortel two Canadian examples. Alot of ordinary people bought stock at very high prices and lost almost everything. Other people are not interested in all the risk of the above and buy mature profit making companies without much potential for growth but little risk.

Someone put up a graph about Amazon. I was surprised that lately its profit is going down. They seem to be pretty close to a mature company. There is still potential for downside. The other thing is Amazon is not doing something no one else can do. They are just doing it better for now. Think Walmart they are not growing and are getting cut into by others.

You’re close, but Musk’s main vision is to “save the environment”. He sees electric cars as the most prudent thing to do first “to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy, which I believe to be the primary, but not exclusive, sustainable solution.”

He has said that SpaceX is actually is a way for him to help finance his car vision.

His main goal is to eliminate fossil fuels entirely, and hopes the world will rely almost exclusively on solar energy.

37

I’ve been wondering about the mechanics of determining stock prices. How does this work in practice? You keep hearing that upon this or that fact/rumor becoming public, stock prices rise or fall within a matter of seconds. Who determines this? Are there always potential buyers and sellers for any stock on the market on the waiting and re-negotiating prices?

Cheers,
malte

38

That is what is confusing me. Why invest in a business that doesn’t make money?

I dunno. Ask anyone that bought stock in Twitter. They’ve been shopping themselves around for 18 months now, and there’s no takers.

If you have some money to speculate, I would short it. They’re on life support.