Amazon v the new cash burning tech megacaps

User Forum Topic
Submitted by gzz on July 18, 2021 - 1:16pm

Submitted by scaredyclassic on July 18, 2021 - 5:14pm.

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

Submitted by gzz on July 18, 2021 - 7:47pm.

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

Submitted by scaredyclassic on July 18, 2021 - 8:32pm.

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

Submitted by barnaby33 on July 19, 2021 - 7:49am.

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.

Submitted by utcsox on July 19, 2021 - 9:04am.

barnaby33 wrote:
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.

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...

Submitted by gzz on July 19, 2021 - 9:13am.

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.

Submitted by gzz on July 19, 2021 - 10:45am.

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

Submitted by barnaby33 on July 23, 2021 - 3:14pm.

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

Submitted by gzz on July 23, 2021 - 5:43pm.

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.

Submitted by carlsbadworker on July 23, 2021 - 5:54pm.

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.

Submitted by barnaby33 on August 10, 2021 - 10:08am.

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

Submitted by gzz on August 10, 2021 - 1:47pm.

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.

Submitted by barnaby33 on August 11, 2021 - 9:47am.

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

Submitted by Hatfield on August 19, 2021 - 9:50am.

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?

Submitted by gzz on August 19, 2021 - 11:01am.

AirBNB is liberal with covering refunds to unhappy guests and guest property damage to unhappy hosts.

I have never used them as I like hotels, but their website does not seem extra advanced and high cost.

Submitted by teaboy on August 19, 2021 - 12:06pm.

gzz wrote:
AirBNB is liberal with covering refunds to unhappy guests and guest property damage to unhappy hosts.

I guess that might explain why I see very few "AirBnB Guest Trashed my Home!!!" articles in my news feed.

tb

Submitted by barnaby33 on August 19, 2021 - 12:11pm.

You need to read different threads then!
Josh

Submitted by Hatfield on August 19, 2021 - 12:47pm.

gzz wrote:
AirBNB is liberal with covering refunds to unhappy guests.

yes, out of the host's pocket. If a guest is granted a refund, it does not come from Airbnb. And getting Airbnb to reimburse a host for damages is a rarity. There's a reason it makes the news when it happens.

All that aside, am I really to believe that a business with 14+ % gross margins, pays out more than that 14% in claims of host damages? That makes no sense.

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