person:yves smith

Uber Releases Ugly 3Q 2018 Results: Losses Widen to $1.1 Billion, Growth Slows | naked capitalism
▻https://www.nakedcapitalism.com/2018/11/uber-releases-ugly-3q-2018-results-losses-widen-to-1-1-billion-grow

Uber has no plan to make money – it would have to raise fares 2 to 3 times to become profitable – how long will investors continue to subsidize a Company that promises to make it up in volume.

Alles klar?

Posted on November 15, 2018 by Yves Smith
From Hubert Horan:

3q P&Ls released tonight. Losses and margins got worse. Gross revenue growth continues to slow down, showing their inability to fix the fundamental weakness in the core car service business.

Expenditures on the marginal business (food delivery, scooters) that are key to the longer term growth narrative drag results down further.

Mainstream media coverage hasn’t reached “The Emperor has no clothes” point yet, but stories are raising explicit doubts about the viability of next year’s IPO.

Actually, as we’ll discuss, there are Uber skeptics, just not necessarily among reporters.

First, from Eric Newcomer at Bloomberg, who shows doubts about Uber’s proposed IPO valuation of $100 billion and its oft-made claims that it’s another Amazon:

Uber’s sales are dramatically slowing even as the ride-hailing company is spending more to fuel global growth, particularly in its food delivery business. Revenue growth of 38 percent in the third quarter was almost half of what the growth rate was six months earlier, when the company was negotiating a $9.3 billion investment led by SoftBank Group Corp.

That’s a troubling sign for a serially unprofitable business that hopes to get valued like a technology company in a planned initial public offering next year. Uber Technologies Inc. lost $1.07 billion in the quarter ended Sept. 30, an improvement over a year ago, but the loss widened 20 percent from the second quarter.

Highly valued companies typically grow quickly or generate big profits — and great ones do both. In the fourth quarter of 2005, Amazon.com Inc. had about the same revenue as Uber’s today — just under $3 billion, not adjusted for inflation. Yet, Amazon earned $199 million in profit and was worth about a fourth of Uber’s $76 billion valuation.

TechCrunch was more credulous, and also touted a more flattering profit metric:

Uber, which is expected to go public sometime next year, just released its Q3 2018 financial results. Uber’s net losses increased 32 percent quarter over quarter to $939 million on a pro forma basis, though Uber expected these losses as it continues to invest in future growth areas.

On an earnings before interest, taxes, depreciation and amortization basis (EBIDTA), Uber’s losses were $527 million, up about 21 percent quarter over quarter. And as Uber prepares to go public, the company has started presenting the income statements with stock-based compensation.

Ten years from now, Uber CEO Dara Khosrowshahi envisions its core ride-hailing business accounting for less than 50 percent of Uber’s overall business, Khosrowshahi told me at TechCrunch Disrupt SF 2018. That means Uber expects businesses like Eats, scooters, bikes and freight to contribute to be more of Uber’s business, which requires Uber to invest heavily in those businesses.

And why should we expect UberEats and scooters to become profitable? Just because Uber wants it to be so?

The New York Tines’ story came off like a string of Uber talking points, with the only apparent real cause for pause that Lyft is also planning its IPO for 2019. For instance:

Uber’s I.P.O. is likely to create an enormous financial bonanza for its many investors and shareholders, including the company’s co-founder, Travis Kalanick, as well as venture capital firm Benchmark and the Japanese conglomerate SoftBank.

To get ready for a public offering, Mr. Khosrowshahi has been trimming Uber’s money-losing businesses. Uber has withdrawn from markets including Southeast Asia and Russia, where it faced stiff competition and was spending a lot of money. It has focused on other areas, like food delivery, as well as other geographies that show more potential for growth. On Wednesday, Uber began a loyalty program that will give riders access to extra perks the more frequently they use Uber services.

Uber said Uber Eats, its food delivery business that started in 2015, was growing rapidly, with bookings through its separate app up 150 percent from last year.

Yet Uber’s spending also continues to rise. The company said its total costs and expenses were $3.7 billion in the third quarter, up from $3.5 billion in the prior quarter.

It would be more accurate to say that Uber is cutting some loss-generating operations while expanding others.

Finally, to the Wall Street Journal:

The results for the three months ending in September show that Uber is still growing quickly but is likely to be unprofitable for some time. In documents for a bond offering last month, Uber said it expected it wouldn’t reach a profit for at least three years.

Uber has turned its attention to providing customers with a host of transportation options in addition to its core ride-hailing service. Mr. Khosrowshahi said he is particularly hopeful about electric-scooters and bicycle rentals, which he has said can be a low-cost replacement for short car trips in urban centers.

“What we’re going after is essentially to debundle car ownership,” Mr. Khosrowshahi said in an interview at The Wall Street Journal’s WSJ Tech D.Live conference Tuesday. “A world in which the people who cannot afford to buy a car have access to consistent mobility wherever they are, that’s a better world.”

Of the 22 comments on the story so far, only one read as positive, and other readers dismissed it as bad sarcasm. And remember that WSJ readers viciously attacked the initial stories on the Theranos fraud, accusing the journalists of being jealous of a talented entrepreneur. A sampling:

charles cotton

I’ve been tracking Uber and its copy cat, Lyft since 2013. The underlying root of their both their problems is that there business platform is toxic and can not ever make a profit. The burn rate is over 90% of investors money which has resulted in a meltdown. Outside investors have dried up and quite frankly dismayed. Such investors were all reckless, naive, and greedy being lured by hyped, false financials and advertising.

The promise of “get in quick, we’re going public’” being the worm on the hook. There were no accurate disclosures or prospectus given to the investor…. No one really knows what is going on at Uber.”

Joseph Swartz

Uber may be the biggest con game the Street has seen in decades…..an IPO of a Company that loses billions of dollars, subsidizes every ride we take, and has gone off the path with Uber Eats, a ridiculous venture. I recently read it’s drivers last about 6 months, on average, before quitting.

Uber has no plan to make money – it would have to raise fares 2 to 3 times to become profitable – how long will investors continue to subsidize a Company that promises to make it up in volume.

Gary Ayer

Uber is raising money via a public offering because otherwise they would go out of business due to continuous losses.

Jef Kurfess

Doing a thriving business selling dollar bills for $.85?

So Uber’s PR machine is having less and less success in keeping its story going. But will polite press amplification be enough to save Uber’s bacon.

#Uber

Negative Interest Rates – Are There Any Positives? | naked capitalism
▻http://www.nakedcapitalism.com/2016/03/negative-interest-rates-are-there-any-positives.html

Posted on March 29, 2016 by Yves Smith

Yves here. I’m a bit mystified that central bankers were so confident that an untested experiment like negative interest rates would work out as planned, particularly since some of the assumptions as to why they thought it would work seem utterly barmy. But this is what happens when you put stock in theories that were debunked (by no less than Keynes), like the loanable funds model, that mainstream economists treat as gospel.
By Steve Worthington, Adjunct Professor, Swinburne University of Technology. Originally published at The Conversation

Negative rates have been introduced by some central banks worldwide. In theory doing so should both devalue their currency, making their exports cheaper and imports more expensive, and at the same time encourage consumer spending. It should also boost lending by financial institutions, as the value of capital being held by both individuals and banks is ever decreasing.

Sadly this theory when put into practice has been found wanting. The Bank of Japan introduced a negative interest rate of minus 0.1% in January 2016 and the yen subsequently increased in value compared to its competitor currencies. Indeed in 2016 the yen is the best performing G10 currency against the US$.

Similarly the Swiss National Bank flagged a negative interest rate of minus 0.25% to be introduced in January 2015, but the inflow of funds into the Swiss franc continued and the rate was finally reduced on its introduction to minus 0.75%, with the aim of discouraging capital inflows. However despite these moves the Swiss National Bank continued to accumulate foreign exchange reserves into the second half of 2015.

The European Central Bank (ECB) further increased its negative interest to minus 0.4%, on bank deposits held at the ECB in mid March 2016, as it attempted to manipulate downward the value of the Euro. The impact of this was undermined somewhat by allowing the European banks to borrow from their central bank at the same minus rate, depending on how much they lend to businesses and consumers. An initial dip in the value of the Euro when the minus 0.4% was announced was then followed by a sharp rise, as the implications of the whole package became clearer.

So will negative interest rates continue to be used as a weapon from the central bank armoury, or will the unpredictable behaviour of consumers and investors undermine the intentions of the central banks?

If the weapon of negative interest rates does not work as expected on currency values or domestic consumption and investment, what else is there left to deploy to prevent deflation and a further slow down in economic actively? Economics indeed truly is dismal science.

#économie #capitalisme #banques

Which Companies Are Buying the #Election? - NYTimes.com
▻http://www.nytimes.com/2015/03/28/opinion/which-companies-are-buying-the-election-securities-and-exchange-commission.

The bipartisan silence testified to the growing importance to both parties of anonymous campaign donations. With each passing year since 2010, when the Supreme Court’s decision in Citizens United opened the floodgates to secretive political giving, politicians appear to value so-called dark money more and value disclosure of unnamed donors less. The issue was finally broached by Representative Michael Capuano, Democrat of Massachusetts. He observed that shareholders have a right to know how corporate cash is spent, and demanded to know why the #S.E.C. has not required disclosure. Ms. White gave the same answer she has given since she became chairwoman in 2013 — essentially, that the agency is too busy with more important issues.

Since then, however, the S.E.C. has added new issues to its agenda, while neglecting to put political-spending disclosure on its to-do list. The omission is indefensible, because the investors’ need to know will only grow as the level of anonymous giving rises.

#SEC illustrates regulator too cozy with the industry it regulates - SFGate
▻http://m.sfgate.com/opinion/article/SEC-illustrates-regulator-too-cozy-with-the-6161571.php

In 2013, the nonpartisan Project on Government Oversight published a study showing that “more than 400 SEC alumni filed almost 2,000 disclosure forms saying they planned to represent an employer or client before the agency.” In light of that, financial expert Yves Smith, who first flagged the Stanford video at her website, #Naked_Capitalism, said Bowden’s comments spotlight a deeper problem at the agency.

“Bowden’s most attractive career option, assuming he does not move into a more senior role at the SEC first, would be to join a private equity firm as a chief compliance officer,” she wrote. “The fact that Bowden made such an unabashed statement of his real loyalties, to his future meal tickets, is a strong and troubling sign that this sort of cozying up is a non-issue at (the) SEC.”

Such “cozying up” is the definition of regulatory capture. We can at least thank the SEC for providing such an easy-to-understand illustration of how it operates.

#Etats-Unis #conflit_d’intérêt #corruption_légale #démocratie

Austerity Kills: Economic Distress Seen as Culprit in Sharp Rise in #Suicide Rate Among Middle Aged
Posted on March 1, 2015 by Yves Smith
▻http://www.nakedcapitalism.com/2015/03/austerity-kills-economic-distress-seen-culprit-sharp-rise-suicide-r

I’m surprised, but perhaps I shouldn’t be, that a recent study hasn’t gotten the attention it warrants. It points to a direct connection between the impact of the crisis and a marked increase in suicide rates among the middle aged.

(...)

As Lambert often says about neoliberalism, one plank in the model is for old people to die faster, and higher suicides speed that process along. It’s not easy to make the smug and the abusive feel ashamed of their conduct, since they are confident they’d never wind up as losers, when the reality is that the odds are much higher than they dare imagine.

#austérité