Thread by @juliangough

I note with interest that Uber have decided to bring forward their IPO. Let me decode that for you: Uber is a debt-crippled mirage of a company, worth nothing. Its backers want to get their money out before the onrushing financial crash makes that impossible. Do not buy shares.

Let me back that up: here’s an analysis that brutally takes apart the case for a hundred-billion-dollar Uber IPO. It’s particularly eye-opening on the awful, unsustainable economic situation of the drivers (and this with rides subsidized by investor cash!)
nakedcapitalism.com/2018/08/hubert…

A lot of horribly over-valued, & debt-laden, tech startups will fail in the coming global meltdown. I just pick on Uber because people have heard of it, and even use it (so they might listen to me!), plus I'm relatively familiar with its bizarre internal financial contradictions.

Uber, and their backers and boosters, will generate an astounding fog of bullshit about how revolutionary and valuable Uber is, in the run-up to their IPO, so let me explain instead in a few short tweets why Uber will go bankrupt within three years.

Uber have never, ever made a profit.
They currently lose several billion a year.
This means every single Uber fare ever has been heavily subsidised by investor money.
OK: not making profits made sense for, say, Amazon, which reinvested its revenue constantly in a real business.

But Uber is not a real, solid, defendable business. Amazon built an astoundingly complex business ecosystem, including a global network of efficient warehouses, that cannot be simply & swiftly replicated by a competitor. Amazon have built a moat; they are now a natural monopoly.

Uber is basically a subsidised app. It is building no loyalty with its drivers, who provide the actual service. 94% quit within a year. 94%! And it is easy to copy its business model. I spent 6 months in Singapore last year: everyone (including me) used Grab, the local knockoff.

Uber got this far by constantly raising new money from new suckers at ever-higher valuations. Right now, the suckers still figure there will be a bigger sucker later. But we're heading for a global financial crash which will choke off easy credit & funding. Without it, Uber dies.

Uber proved there was a market for a ridesharing app. But they built up loyal relationships with NOBODY; not drivers, not passengers. Anyone wanting to compete with Uber can step into the market, financially ahead of them by the billions Uber burned through to get to this point.

Remember: every Uber fare has been subsidised by investor cash. And Uber has never made a profit. At some point fares will have to reflect reality, in order to generate a profit. Competitors can step in at that, profitable, point, unencumbered by debt, & compete. Uber is doomed.

One last point: Uber set out to disrupt a business, the taxi industry, WHICH HAS NEVER BEEN PROFITABLE IN AN UNREGULATED MARKET. Check out this history, from an excellent Forbes article on Uber.

(Here's the link to the entirety of that Forbes article on why Uber can't make money, which is well worth a read. It's from December 2017, but, trust me, nothing important has changed.)
forbes.com/sites/lensherm…