For everyone that gets wow'd by phone apps and buzzword like "innovation" and "disruption", this is the news that you've been waiting for.



Two days after Lyft submitted paperwork to the U.S. Securities and Exchange Commission for an early 2019 initial public offering, Uber has done the same, per The Wall Street Journal. The company filed confidentially for an IPO on Friday, marking the beginning of a race for the two ride-hailing giants to the stock markets. Uber’s most recent private market valuation was a whopping $72 billion, though the nearly 10-year-old business reportedly expects Wall Street to value it at as much as $120 billion in what will easily be one of the most highly-anticipated IPOs of the decade.

That would be real impressive if it wasn't for the lack of profitability of Uber.

Silicon Valley is better at generating hype than profits.



Uber's losses ticked up to nearly $1 billion during the third quarter and annualized growth is continuing to slow, according to the private company's self-reported financials for Q3.

...

Adjusted net loss widened in the third quarter to $939 million; it was $680 million in Q2.

Adjusted EBITDA loss for Q3 came in at $527 million, which is down 13 percent year over year, but up 24 percent since Q2.

Gross cash on hand decreased to $6.55 billion, down from $7.3 billion at the end of Q2.

Losing money isn't a new thing for Uber.

Uber registered $4.5 billion of losses in 2017, lost another $2.8 Billion in 2016, and another $2 Billion in 2015.

Those are Billions, with a B.

No company has ever burned cash like this. Ever.

And there is no reason to believe that things will turn around soon.



But, but, but — you may say — Uber has established a large business in cities over the world. Yes, it’s easy to get a lot of traffic by selling at a discount. Uber is subsidizing ride costs. Across all its businesses, Uber was providing services at only roughly 74 percent of their cost in its last quarter. Uber was selling its services at only roughly 64 percent of their cost in 2017, with a GAAP profit margin of negative 57 percent. As a reference point, in its worst four quarters, Amazon lost $1.4 billion on $2.8 billion in sales, for a negative margin of 50 percent. Amazon reacted by firing over 15 percent of its workers. Uber defenders might argue that that’s a big improvement from 2015, when revenues only covered 43 percent of costs, and the GAAP margin was negative 132 percent. But as we’ll discuss in more detail, this reduction in how much Uber spends to get each average dollar of revenue didn’t come from improved efficiency, but was due to almost entirely to cutting driver pay. The transportation company appears to have hit the limit of how much it can squeeze drivers, since churn has increased.

You can bet that there are thousands of suckers eager to throw their cash into this money pit.

If you are looking for a different place to throw your cash away, Lyft only lost $688 million last year, and lost 41 cents on every dollar of revenue it generated in the first half of this year.