Jeffrey Lee Funk and Gary Smith have a list of startups with $3 bllion or more in cumulative losses:
Company Founded Funds Raised Cumulative Losses Uber Technologies 2009 $25.2 billion $31.7 billion WeWork 2010 $21.9 billion $20.7 billion Teladoc Health 2002 $0.17 billion $11.2 billion Rivian Automotive 2009 $10.7 billion $11.1 billion Snap 2011 $4.9 billion $9.1 billion Lyft 2012 $4.9 billion $8.9 billion Airbnb 2008 $6.0 billion $6.0 billion Palantir Technologies 2003 $3.0 billion $5.8 billion Gingko Bioworks 2009 $0.8 billion $4.8 billion Door Dash 2013 $2.5 billion $4.6 billion Invitae 2010 $2.0 billion $4.4 billion Nutanix 2009 $1.1 billion $4.3 billion RobinHood 2013 $6.2 billion $4.2 billion Bloom Energy 2001 $0.83 billion $3.3 billion Wayfair 2002 $1.7 billion $3.0 billion
Funk and Smith write:
Only one of these 15 companies has ever had a profitable quarter — Airbnb had a $378 million profit on $2.1 billion in revenue in the second quarter of 2022. All of the other startups in the table have recent losses that exceed 10% of revenue and most exceed 30%.
Any hopeful arguments that profitability is just around the corner ring hollow when every company is at least nine years old and two are more than 20 years old.
As we said in our post, Theranos built a unicorn, and we just built a better horse. You can get more money for a unicorn, even though—or especially because—unicorns don’t exist,
There’s something weird about the whole “unicorns” thing, just as it’s weird when people refer to some idea they’re promoting as being “magic.” I get that expressions such as “unicorns” and “magic” are supposed to be metaphors, but all so often they come uncomfortably close to the truth in that they’re describing stories that are not, in fact, real.
Kind of like when people use the term “incredible” for stories that are literally not credible.
A more positive way of looking at a so-called unicorn is that’s it’s a gamble. Someone has an unproven idea and maybe it just has a 1% chance of succeeding, but if it does succeed it might make it big. So it can be rational to invest in it.
But then here’s the thing—it there really is just a 1% chance of succeeding, then the vast majority of these should . . . fail! The first part of “high risk, high reward” is “high risk.” From that standpoint, what’s impressive is that the unicorns on the above list are still standing. I guess that Funk and Smith are saying is that we should think of these as companies that haven’t failed . . . yet.
I’ve always assumed that the business plan of some of these companies was to become so useful to the decision-making class (business executives, government officials, and rich people) that they’d ultimately get some sort of government support.
The whole Uber thing confuses me. I’m not an accountant, but I follow the news, and I see three stories about Uber:
1. Uber is ripping off customers with surge pricing.
2. Uber is exploiting drivers with sub-minimum wages.
3. Uber is cutting corners by avoiding regulatory obligations.
So, where does the money go?
Adede:
I always assumed that Uber’s money-sink are its ordinary, non-surge, fares, which (so I’ve read) are priced below cost, so that even after cutting corners etc. they’re still losing money.
Hmm…makes sense.
according to its financial statements, Uber spent $11B on R&D over the previous five years.
My opinions are:
1. I think is just unfounded. People don’t like dynamic pricing or “price gouging” pretty much no matter what, but uber doesn’t have anywhere near the monopoly needed to set truly exploitative pricing. Their prices were in fact lower than they should have been for break-even unit economics, but there were too many VC-funded nigh-identical platforms for them raise.
The major 2/3 labor issue is not with wages, which are pretty decent in major urban centers, but with health insurance and other employment benefits that are cheaper with a group rate. By not classifying drivers as employees, they were able to dodge regulations requiring those benefits, and because of the way health care is tied to employment, the drivers would essentially have to do without.
Another big regulatory obligation that uber avoided was the taxi medallion system, which created a class of monopolistic rent-seeking medallion owners. In my opinion, skirting this regulation is strictly good.
I think the long term equilibrium is that there will always be a couple of ride-hailing platforms, at least one of which in partnership with traditional taxi companies, with razor thin margins and prices higher than uber’s in the pre-2021 era.
On point 1: based on both former employees and what information uber has publicized, the surge pricing algorithm is explicitly designed to clear the market rather than maximize profits, with wait times as the target metric. I don’t think it typically increased the profitability of rides’ unit economics, though that may have changed in the last year or so with the liquidity crunch.
I know customers don’t like surge pricing but I don’t see how it could fairly be called a ripoff. Doesn’t Uber show you the fare or a good estimate of the fare before you start the trip? I haven’t used it in years, but they used to do this and I’d be kinda surprised if they have stopped.
Surge pricing seems totally fair to me — or at least the _concept_ of surge pricing, I suppose there are ways to implement it that I would consider unfair. When there’s a big demand for rides and there aren’t enough drivers to meet the demand, you charge more and use at least some of the extra to pay drivers more during those period. Higher charge means less demand, and higher wages mean more supply. Try to get them to balance. Not only does that seem reasonable to me, I think more of the world should work in that general way! Maybe it would be considered more acceptable if they keep the pricing scheme but redefine terms: during peak period you pay regular prices, and during slow periods you pay discount prices. Or happy hour prices. Nobody ever complains about happy hour prices.
Corruption.
https://www.theguardian.com/news/2022/jul/10/uber-files-leak-reveals-global-lobbying-campaign
This list also makes me wonder about the definition of “startup”. The word conjures up images of like, three people in a garage or some tiny sublet office somewhere eating ramen to get by on their savings to support the company they just founded. But when your company is 10+ years old, has >10K employees and a big glass HQ, are you really a startup anymore? What do you have to do to graduate to “just a company”?
Anyway, I’m waiting for Twitter to join this list. With $44 billion invested, a bit more mismanagement could send them to the top of the charts!
> definition of “startup”
If it’s profitable, it’s a real business.
If it’s still living off of “runway” provided by investors, it’s a startup.
Or at least that’s what I tell my friends who work for startups; probably a more broadly useful definition would have to do with whether there are investors still looking for a big exit, so say anything VC-funded that hasn’t gone public.
This post seems really disdainful. In the era of cheap money, taking losses as part of an initial runway was not an issue. Of course, that’s changed, but can you fault someone for running a business in a way investors and the macro climate reward? What is the point of the post?
Blank:
You can read the linked article by Funk and Smith. I don’t follow financial news that closely so their discussion was interesting to me. You may already be coming into this topic well-enough informed that it’s not really news to you, in which case I can see that you won’t get so much out of this post.
We can criticize fake-it-til-you-make-it companies and warn investors that successful companies need more than a seductive story and charismatic CEO:
https://www.marketwatch.com/story/sensible-stock-investors-put-their-money-on-a-companys-real-profits-not-wall-streets-false-prophets-11660209798
It does seem funny that people are willing to invest based on the charisma of the CEO. But I wouldn’t recommend _avoiding_ companies with charismatic CEOs either. And to the extent that the factors that make the CEO charismatic actually matter to the workplace (or to purchasers of the company’s products) it doesn’t necessarily make sense to ignore the CEO’s charisma either.
Apple Computer under Steve Jobs is perhaps the most extreme example. I know people who thought Apple was ‘all hype’ in the early 2000s, thinking their success was entirely due to Apple “fanboys” who were suckered by Steve Jobs. And I think some of the characteristics that made Jobs charismatic were an important part of Apple’s success.
Elon Musk has made himself a bit of a laughingstock over the past couple of years — the Twitter “blue check” thing is awesomely ridiculous — but he is a genuine visionary in both electric cars and rocketry and he’s one of the few company CEOs that most people can name. If people failed to invest in Tesla simply _because_ it had a charismatic CEO and they assumed it was therefore overhyped, those people made a mistake.
If a company has suddenly become the darling of investors, and it has a charismatic CEO, you should worry that the investment success might all be based on CEO-related hype — the point of your article, Gary — but it does not follow that every successful company with a charismatic CEO is hype-based. I know you didn’t say it was! Just felt it was worth pointing out.
It’s tough to make predictions, especially about the future.
However, WeWork has already been the largest unicorn failure ever a few years ago.
How much did the market really learn from the Dot Com bust in 2000-2001? Then the mantra was network effects – market share and growth is all that matters, once you are the biggest, self-sustaining growth will ensue. People then ignored the ease of entry which made such strategies fail. So, with this latest list, what is the belief that these companies will succeed? Most of them appear to be based on the idea that network effects will again make them a market leader with little effective competition. Again, it seems that they underestimate the ease of entry (for things like delivery services and transport on-demand, entry is fairly easy).
It does make me wonder whether much was learned at all. The glaring successes – Microsoft, Amazon, Google – have features that limit competitive entry – something these unicorns seem to lack.
If you’re inclined to go into more detail I’d be interested in hearing what factors you think limit competitive entry with firms like Amazon/Google (or perhaps Facebook) but don’t apply to a firm like Uber
Network effects are real, but not always as strong as people think. A bunch of work has been done trying to distinguish between strong and weak network effects (you can take a look at Liebowitz’s work, https://personal.utdallas.edu/~liebowit/, much of which is quite controversial). Another way to view the issue is through “lock-in.” Microsoft customers have high switching costs. Amazon’s customers not so much – except that Amazon has done a number of things to lock customers in effectively. Many of the unicorns have failed to find any ways to really raise consumers’ switching costs and have business models that are not that hard to copy – especially when there are big players who can rival their network effects fairly easily. As someone has already pointed out, taxi companies can enter the uber/lyft market fairly easily. Many of the unicorns don’t really have good ways to lock their customers in, so they have to spend tons of money marketing and pricing below cost in order to attract them, apparently with the belief that when they have enough customers then switching will be difficult. I think that belief is misguided in many cases.
To pile on here:
Google‘s targeted advertising and search both make use of their data to improve themselves. So on both the search and consumer search sides, Google has a product advantage from already being the leader.
On Amazon’s side, I’m not going to touch their retail business since it’s not profitable except for a brief pandemic surge. But with AWS, their main profit center, cloud competing depends on scale by definition. The very idea is that batching huge compute loads across multiple companies in a place with cheap electricity and cheap space is cheaper and easier than each company running their own server. So there can never be a small scale cloud services provider.
On social media, unlike uber, consumers don’t pay, so have minimal incentive to comparison shop. In addition, the value of a profile depends on the entire history of what’s been done on the platform, while the only history that can’t be migrated across ride hailing platforms are the comparatively unimportant reviews. The space of possible interactions in social media depends on every other person on the platform, while on uber a customer is only interested in matching with one driver in their area for the right price. And of course, social media also improves their core revenue driver, the advertising, with their massive volumes of data. Ride hailing has a matching algorithm, but it’s comparatively low dimensional and much less data hungry.
Amazon and Google don’t compete head to head very much. Google’s primary business are search and YouTube, Amazon’s profitable businesses are web services and Whole Foods / Amazon Fresh. Last I heard the retail business was still losing money but I haven’t investigated that.
In terms of Uber vs Amazon, Amazon has a massive network infrastructure like warehouses and grocery stores, where Uber has..??. Corporate financial statements include a line on the balance sheet called “Property, Plant and Equipment” (“PPA”), which is a big clue to how much it would cost to replicate a company’s business. As of Year End 2021, gross:
Uber PPA = $4.4B
Amazon PPA = $295B
Just wild guessing, it would probably take investment of at least 5-10% of those amounts to initiate a very small competing business, or 25% to become a significant competitor, to either firm. That makes Amazon more or less untouchable, and Uber fairly accessible.
Shopify is often mooted as a seller-centered business that could compete with Amazon. It has apparently started building warehouses to provide shipping services for it’s sellers. It has gross:
SHOP PPA: $0.40 B
So it has a long, long, long way to go.
“I’ve always assumed that the business plan of some of these companies was to become so useful to the decision-making class (business executives, government officials, and rich people) that they’d ultimately get some sort of government support.”
Or just too big to fail. I assume that lots of people would be bent out of shape if Uber failed (I’m assuming the US taxi industry is such that it couldn’t take up the slack if Uber folded*). Here in Tokyo, the taxi companies figured out how to get onto peoples’ cell phones, so we don’t need Uber.
On that list, only Uber would leave anyone other than investors bent out of shape if they failed, and only Uber has any sort of income, so it seems an outlier, or at least maybe in another class.
*: This explains the lack of profits: the basic plan was to trash the taxi industry to assure that it really was too big to fail, so it has to keep prices at levels that no other player can compete with. (It’s not just Uber, it’s been pointed out before that the business plans of many of these companies depend on there being no other players in their niche.)
One company that’s not on that list is Tesla. If it weren’t for carbon tax credits, it would be on that list.
David:
My take on Uber, back when it became popular a few years ago, was that its users were in love with it: the convenient cheap taxi rides, sure, but also the idea of Uber. They loved Uber the same way that I might love a new Jamaican beef patties place, not just the food but also the joy in finding the place, going there, blogging about it, whatever. Or the way I loved my Walkman back when I got one, back in the 80s: that think was just amazing!
Then when people started to question Uber’s financial future, I just figured that Uber-lovers included enough influential people that somehow, something would be done to keep it alive, even if it didn’t make financial sense. This still might happen, but the part that I didn’t get was that what people love is not the Uber brand name but rather the Uber functionality, so if Uber is replaced by various other taxi apps, no one would really care.
It’s easy to say all this now, but I can’t really see around corners when it comes to this sort of thing. Each new development in the story is a surprise to me, and my perspective on all of this is as an observer, not an expert.
” if Uber is replaced by various other taxi apps, no one would really care.”
Right. (And they’d still be called “Ubers”) My assumption is that if Uber died, it wouldn’t be possible to replace it, because it’s modus operandi is so obnoxious. An Uber replacement would have to pay depreciation on driver’s cars, medical insurance for drivers, a reasonable wage to drivers. That would increase costs enough that in the medium term, we’d get taxis back. But the short term might be paiful.
“It’s easy to say all this now, but I can’t really see around corners when it comes to this sort of thing. Each new development in the story is a surprise to me, and my perspective on all of this is as an observer, not an expert.”
You’re more of an expert than I: I don’t even own a cell phone, and thus have never used Uber.
(Even worse, taxis in Japan are completely weird: to quote my late father: I’ve never seen a clean taxi in Boston, I’ve never seen anything but a spotlessly clean taxi in Tokyo. And the taxi drivers here are all fairly decent blokes: get one talking, and you’ll get a reasonable commentary from a point of view not available elsewhere.)
Here is my skepticism about Tesla:
https://www.bloomberg.com/opinion/articles/2022-06-30/tesla-s-overpriced-stock-won-t-keep-it-ahead-of-other-ev-makers?leadSource=uverify%20wall
If you plop a billion dollars in my lap I promise to use it to fund scientific research including ruthlessly auditing the horribly polluted science literature, and funding a decentralized federated searchable self publishing system. And I plan ahead of time to lose the whole thing. This means my profit will be $30B more than Uber…
The world is such a fucked up place that I can have a clear beneficial plan which clearly makes more than Uber does by tens of billions of dollars… And yet there isn’t a chance in hell of me getting funded
I admit to being economically inept, but I don’t understand how Uber operates at such a loss. They don’t own cars or pay salaries to drivers. Their income is, I believe, a cut of the fare, and so a positive number. They provide the coordination and software, but shouldn’t that have been developed at the start, and then be fairly simple to scale up? (I’m sure software to coordinate 100k drivers is more costly to run than 10k, but it’s hard to imagine that its 10x more costly.) Where does the money go? I don’t doubt that this is a stupid question, but this seems like a good place to ask it.
I don’t have warm feelings towards Uber, or many feelings at all. I’ve taken it a single-digit number of times. I’m one of the odd people who usually takes public transit when at conferences (and walks a lot, and doesn’t go to a lot of conferences). I’ve wondered, by the way, if Uber’s contribution to the decline of public transit is quantifiable.
“I don’t understand how Uber operates at such a loss. ”
Here’s Uber’s income line from 2019, (reclassified in 2020):
Revenue: $13B
COSTS:
Cost of Revenue: ($8.4B)
Selling / Gen / Admin: ($5.4B)
Labor & Related Expense: ($1.2B)
Advertising: ($1.3B)
R&D: ($4.8B)
Total Operating Expense: ($21B)
NET INCOME: ($8.1B)
Data! Thanks.
Chipmunk and Somebody: thanks! This makes more sense — the losses are unrelated to Uber as a distributed taxi service, and more related to Uber as a future self-driving car company that happens to destroy taxis and burn cash. I still don’t see why having a bunch of freelance drivers ferrying passengers around is a useful precursor to a fleet of self-driving cars, or maybe this is just the way the story haphazardly developed. I’m also curious what “Selling / Gen / Admin” means.
How could any company raise capital based on losing money while they position themselves for a future (self-driving cars) that at best won’t arriving until the company has been burning money for 20-25 years?
This is veering into speculation rather than testimonial, but I can see three arguments:
1. I think many marketplace companies overestimate customer loyalty, and try to apply concepts from social media companies like “life time value” and “cost of acquisition” without understanding how useless those concepts are when users comparison shop inexpensively
2. They consider themselves tech companies rather than taxi companies, so they think
their engineering talent and connections put them in an advantageous position. They’re not entirely wrong on this front, but the difficulty of autonomous driving has been undersold and capabilities of AI in risky settings have been oversold.
3. Fleet rollout: they probably figured they could offer to 1-epsilon of drivers the option to monitor an autonomous vehicle while they data gather to improve their algorithm, and gradually offer it to existing users to build trust.
This is how!
https://www.chicagotribune.com/opinion/editorials/ct-driverless-cars-edit-0913-20140912-story.html
https://techcrunch.com/2015/01/18/autonomous-cars-are-closer-than-you-think/
https://www.barrons.com/articles/autonomous-driving-is-closer-than-you-think-but-not-because-of-tesla-51618620549
From what I could gather, it was earnestly believed within the company, not a story meant to drum up capital.
“I still don’t see why having a bunch of freelance drivers ferrying passengers around is a useful precursor to a fleet of self-driving cars”
I think because Uber has the app that finds the best vehicle for a given customer. From there it doesn’t matter whether the vehicle is driven by a person or a computer. Uber doesn’t need to own the self-driving cars and it probably doesn’t want to because of the capital cost. Self driving creates a kind of franchise opportunity, where a given operator, instead of owning and driving one car themselves, can own dozens of self-driving cars in a city or in many different cities. This is similar to how many restaurants chains operate. There are several publicly listed companies that operate various configurations of restaurant franchises with hundreds of stores and several different brand names.
“or maybe this is just the way the story haphazardly developed”
Ha, yeah, partly that too.
BTW, Uber has other businesses, including a freight brokerage. The stock is currently rated “strong buy” by Morningstar, with a “Fair Value Estimate” of $73/shr, ~150% above the current stock price. Morningstar says:
“We project that Uber’s net revenue over the next five years could grow 23% annually, on average.”
Note our favorite word, “could”. :)
I’ve never taken an Uber (or Lyft) ride but then again prior to Uber’s creation I had only ever ridden in taxis a handful of times in my life.
So as an outsider, I’ve just been assuming the appeal is mostly the fact that 90% of the taxis I see look pretty crummy while 90% of the Uber/Lyft cars seem at least as nice as my own car. That plus of course the enormous preferability of using an app instead of phoning a telephone number and talking to a dispatcher (which is still how taxi companies in my locale operate).
Guess I’m surprised the Uber thing didn’t drive taxis out of business in 36 months or so in most areas. Which isn’t to say I am a fan of Uber as a company. Just that I (think I) totally understand its appeal to consumers.
It would have been fairly easy to make a short term profit. Looking at Chipmunk’s numbers, they would have to raise prices a bit and shrink everything besides cost of revenue to maintain just enough staff to maintain the platform and provide some small quality of life app updates (remember that labor does not include drivers here who are/were not employees, so the revenue does not scale directly with the labor costs).
But in the long run, that model would doom them to being a relatively small company with thin margins, and the investors (and honestly probably also the founders) dream of being Google or Amazon. It’s just too easy to create a nearly identical ride-sharing app, and unlike social media, drivers and riders can easily switch to the platform with the thinnest margins by searching across multiple apps, so it’s an immediate race to the bottom. So, I have it on decent authority (though I can’t say how) that uber’s strategy around 2019 was to aggressively expand and loss lead to make it impossible for competitors to enter the market without big VC financing, then hold market share until self-driving cars brought their driver costs down to profitability. Then, privileged access to self-driving car tech would be their competitive advantage and profit driver. This was also their plan around their unprofitable food delivery business.
It was a stupid plan.
FYI, in Q1 and Q2 of this year, Uber booked non-operating losses of over $7B. Over the last three quarters it’s “long term investments” reported on the balance sheet have dropped from $13.2B to $4.5B.
Crypto losses?
>Kind of like when people use the term “incredible” for stories that are literally not credible.
In pro cycling, “unbelievable” and “incredible” became euphemisms for describing performances/athletes deemed as highly suspicious for PED use.
I’m going to look at this from a different perspective — why do people want to work for these companies?
Back in 1999, the average start-up had a 1 in 10 chance of succeeding, and you had to work there for 4 years to fully vest. So expected time to retirement was 40 years. Well, I can work a stable job without the pressure of working at a start up, and still have an expected time to retirement of 40 years…
And 1 in 10 is probably wildly optimistic.
Robin,
I’ll make two guesses.
1) People choosing to work at startups did not expect there to be any such thing as a “stable job” that lasts 40 years.
2) And/or people choosing to work at startups found the prospect of either being in the same place for the next four decades or, even worse, being moved about the country at the behest of an employer to be incredibly stultifying.
Bonus third guess. A lot of them probably hoped to hit the jackpot and find themselves vested in a company that makes them a millionaire (on paper at least) before the age of 30.
Well, I worked in a startup – it was mostly for building something awesome with people I liked. I‘m not going to do that again.
How did Teladoc lose $11.2 billion on an initial investment of $0.17 billion? I checked, and they don’t have 11 billion dollars of debt.
Accounting is not my strength, but I took a look at Teladoc. For the first nine months of 2022 they reported a loss of $9.85 billion, compared with $418 million for the first nine months of 2021. The bulk of this appears to be a “non-cash goodwill impairment charge” of $9.63 billion. I had to look that term up and I may not understand it, but you can read it here: https://www.investopedia.com/terms/g/goodwill-impairment.asp. The noteworthy excerpt is “impairment may occur if the assets acquired no longer generate the financial results that were previously expected of them at the time of purchase.” My take is that means they had monetized some kind of hype and are now accepting the reality that it isn’t real. Maybe someone else can offer a clearer explanation.
The goodwill impairment is the result of them writing down the value of the acquisition of telehealth company Livongo, which they acquired in the heat of the pandemic gold rush in 2020 for $18B, even though it was valued at less than $4B at the beginning of 2020. They seem to have financed the acquisition by issuing new shares, as the “paid in capital” for TDOC jumped by $16B during 2020, and the outstanding share count doubled. TDOC’s price at the time was ~$250 and the share count doubled from roughly 75 to 150, so that adds up to roughly $18B
The acquisition was panned from the get-go, and TDOC’s stock dropped 20% on the news of the acquisition.
https://www.cnbc.com/2020/08/05/teladoc-acquires-livongo-creates-37-billion-health-tech-company.html
This argument is too simplistic. I cannot comment on whether or not any of these “unicorns” are over or under-valued. But just looking at “revenue” and “losses” misses the big picture. A company that keeps growing can afford to lose money doing so, and still gain value. The almost cliché well-known modern example of this is Amazon. But the concept is simple: as long as a company can grow and there are winner-takes-all dynamics in play, that company should spend all its money to grow in order to reap the rewards later on.
I’m sure some of the companies in the list are overvalued. But whether or not they have ever turned a profit is not strictly relevant. What these valuations represent is *potential*. Airbnb, for example, may have 6 billion in cumulative losses and a bit of profit, but the fact that it has 8 billion usd revenue makes these cumulative losses much less important as it has the potential for lots of money passing through it every year for the rest of its existence, some of which can surely be converted to profit. And the market agrees, the company is valued at *70 billion*. Uber is another good example – while it may end up failing in the end, the story I’ve always heard about Uber was that it was positioning itself to be ready for self-driving cars so that it would be ready with a huge user-base once they are here. This may not work out, but if it does, that’s huge.
But I don’t object to the story that unicorns are overvalued – they may well be. But the kind of simplistic argument of the link really doesn’t prove anything.
Uber and the likes are not real businesses. They are taxi companies operating at a massive loss.
Airbnb is a completely different animal. Airbnb is a profitable hotel company that doesn’t have to own or maintain any hotels.
Cumulative losses is just not the right metric here. It should be market cap. If you invested in Uber at $10/share in 2011, how much losses they’ve made since then isn’t relevant. You still did pretty decent selling at $25.
In that sense, Uber’s current market cap is ~$50bn, which is 2x their total raise. You truly cannot compare that to WeWork, which has lost 90% of the invested capital – current market cap is 2bn.
You may ask why Uber has a market cap so high if they lose money. Well their losses have significantly narrowed, and are now cash flow positive, with a path to be GAAP profitable in the coming years
worth noting that the early investors had a chance to cash out at IPO. retail took the biggest hit. rich getting richer by ganking poors is a tale as old as time.
who would be the rich and the poor here?
>>Only one of these 15 companies has ever had a profitable quarter — Airbnb had a $378 million profit on $2.1 billion in revenue in the second quarter of 2022.
I’m no accountant, so maybe I’m misunderstanding. But when I look up Net Income for AirBnB on macrotrends dot net, it just about matches — $379m in Q2 2022 — so I think I’m looking at the right number: https://www.macrotrends.net/stocks/charts/ABNB/airbnb/net-income
(Note that AirBnB had a number of other profitable quarters as well.)
OK, and then when I check that same web page, I find that Uber had 2 profitable quarters in 2021; Invitae had a profitable quarter; Nutanix had a profitable quarter back in 2016; Robinhood had a tiny profit in one quarter in 2020; and Wayfair had a number of profitable quarters in 2020-2021.
Am I totally missing something here?
I’m not sure where Gary got his data on AirBNB but according to data on Schwab, Yahoo and Edgar they have been profitable for of the last five quarters, earning $2.4B on $10.B in revenue. The company may or may not be overvalued but it doesn’t look like they’re going to go bankrupt.
Gary seems to have missed that travel companies (ABNB, UBER, LYFT) were hit pretty hard by the pandemic, with massive revenue drops, but a very competitive hiring environment. So the last two or three years aren’t really representative.