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Is Uber Bleeding to Death?
"Recliner" wrote in message ... Robin9 wrote: tim...;158053 Wrote: came into my in box via my linkedin account https://www.linkedin.com/pulse/uber-...jared-carmel-2 posted without comment (for now) tim --- This email has been checked for viruses by Avast antivirus software. https://www.avast.com/antivirus Interesting. What surprises me is that Uber is deemed to be losing money hand over fist. Not making enough profit to provide investers with a satisfactory return is one thing. Actually making a substantial loss is another. As Uber's drivers are paid only a percentage of what customers are charged, in London at least the business must show a profit before overheads are included. Are Uber's overheads far too high? Uber's overheads are famously low. Why do you think Uber is making a profit in London? It doesn't even make a profit in the US. Uber makes no attempt to make a profit. It is pouring investment funds into growth, with the aim of a mega IPO. "Uber's losses and revenue have generally grown in lockstep as the company's global ambitions have expanded. Uber has lost money quarter after quarter. In 2015, Uber lost at least $2 billion before interest, taxes, depreciation and amortization. Uber, which is seven years old, has lost at least $4 billion in the history of the company." "Subsidies for Uber's drivers are responsible for the majority of the company's losses globally" And now on earth do Uber spend so much on subsidising drivers? The drivers pay all of the costs of running the car and Uber pay them a percentage of the fare to cover those costs and provide an income for the driver (some argue, a pittance of an income). All Uber pay for is the advertising and the Hailing/tracking "technology". It is, of course, the sunk costs of investing in new technology that causes starts ups to report losses in the initial years of operation that need to be recouped later. But much of it is a one off cost that doesn't re-occur year after year, and in any case Uber's technology is pretty simple. Apart from having to add servers to their cluster (whatever the technical term really is) as demand grows, what additional technology costs do they have in year 2, 3 4 ...? It's the same basic app(s) that need to be downloaded - either by users or by drivers (OK it needs translating, but if that is costing them more than a couple of grand per language they have been ripped off), and the infrastructure that it is downloaded over, and used on, is provided by someone else (with access costs paid by the user/driver) Unless ... Uber are somehow paying for the cars up front for drivers who can't afford to fund them themselves? If there are, and this is the cause of the losses, then they are constructing the accounting for the transaction wrongly. The value of the cars (or the outstanding loans) should remain in the P&L as a capital item and offset any loss in the accounts cause by spending the cash on the cars. All that leaves is the adverting costs as they roll out to new countries but 2 billion per year on advertising - really! Perhaps this is some taxation game that they are playing reporting these losses? tim |
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