SLL has always had a tough time figuring out business models where losing money is an integral and continuing part of the strategy. It must take an MBA from an elite business school to understand it. From Wolf Richter at wolfstreet.com:
Something is out of whack on the expense side.
Waymo, the self-driving car unit of Google’s parent company, filed a lawsuit on Thursday in federal court against Uber and its recently acquired startup Otto, accusing Uber and Otto’s founder Anthony Levandowski, who’d been a project leader at Google’s self-driving-cars project since 2009, of stealing a huge pile of trade secrets.
The New York Times:
In a federal court filing in San Francisco, Waymo said Anthony Levandowski, who runs Uber’s autonomous car division, downloaded 14,000 files from Google a month before leaving to start his own self-driving car company, Otto. Uber acquired Otto in August for $680 million, about seven months after Mr. Levandowski left Google.
“Otto and Uber have taken Waymo’s intellectual property so that they could avoid incurring the risk, time, and expense of independently developing their own technology,” the company said in the filing. “Ultimately, this calculated theft reportedly netted Otto employees over half a billion dollars and allowed Uber to revive a stalled program, all at Waymo’s expense.”
This lawsuit sheds new light on a problem Uber has, a problem that transcends all other problems, of which Uber has plenty: In 2015, Uber lost $2.2 billion; in 2016, the losses are said to have jumped to $3 billion.
Net revenue – the amount left over after it pays its drivers – was expected to exceed $5.5 billion for 2016. In the third quarter alone, it lost $800 million on $1.7 billion in net revenue.
But it’s even worse; these figures are based on sources cited by Bloomberg in late December:
Those are rough figures that may underestimate how much money Uber is losing and don’t include interest, taxes or stock-based compensation.
But it doesn’t seem to matter to investors who’ve been eager to throw vast sums of money at it. Uber has received a total of $12.9 billion in funding, according to the Wall Street Journal. The last round of funding valued the company at $68 billion, which is 37% higher than Ford’s market capitalization of $49.6 billion, though Ford generated $152 billion in revenues, a net income (GAAP) of $4.6 billion in 2016, and an “adjusted” (non-GAAP) income of $10.4 billion.