Faux profitability

Gig economy (neoliberal wet dream)

Bezzle

Hubert Horan has not, as far as I know, yet reacted to the latest on Uber and Lyft faux profitability.[1] My assumption is that the companies continue as they have:

Uber also continued its ongoing efforts to mislead reports and investors by emphasizing its “EBITDA Profitability” metric, which is not a measure of either profitability or EBITDA [Earnings Before Interest, Taxes, Depreciation, and Amortization]. An honest EBITDA measure would deduct interest, taxes, depreciation and amortization, which account for 6% of Uber’s total expenses. Such a measure would provide no new useful information for investors since it would closely track more widely understood measures such as GAAP [Generally Accepted Accounting Principles] Net Income and Operating Profitability. Uber’s bogus EBITDA measure deducts additional expenses ($6.6 billion in the last three years) that can vary widely from year to year that can account for as much of 20% of total expense. And its “Segment Adjusted EBITDA Profitability” which purports to measure the separate profitability of ridesharing and food delivery, is even worse, since it deducts another $500 million per year of core expenses, including Uber’s IT costs. [4] A 189 slide deck that Uber management presented at its February 10thInvestor Day made aggressive promises about improved EBITDA profitability, but never mentioned when it might achieve honest GAAP profitability. [5] . . .

Lyft’s published GAAP net loss in 2021 was just over $1 billion on $3.2 billion in revenue, a negative 31% profit margin. Its cumulative losses over the five years when it has published financial reports now total $7.6 billion. This included gains from selling its failed autonomous vehicle operations to Toyota, which will total over a half billion dollars over the next few years but (as with Uber’s divestures of its failed operations) have nothing to do with the market performance of its ongoing business. As seen in the table below, adjusting for this increases Lyft’s 2021 loss by $120 million, so this is a smaller problem than Uber’s $3.2 billion profit overstatement.

Lyft’s operations remain cash negative, burning $100 million in 2021. This was almost identical to its operating cash burn in 2019 but a huge improvement over the $1.3 billion burned in 2020. Lyft has burned through 55% of the cash it had at the end of 2018 and would have burned through 65% but for its ability to convert some of its failed AV assets into cash.[2]

Horan accuses both Uber and Lyft of intentionally misleading investors.[3] As I said, I’m assuming this continues and, unfortunately, Jackie Davalos is among the deluded as she refers to Uber’s profitability without any qualification whatsoever.[4] But my earlier question remains: For how much longer can this go on?

Tina Bellon, “Lyft shares tank 26% on higher cost of getting drivers back on street,” Reuters, May 3, 2022, https://www.reuters.com/technology/lyft-says-customers-spending-despite-inflation-results-top-targets-2022-05-03/

Jackie Davalos, “Uber Sidesteps Lyft’s Debacle With Optimism Over Riders, Profit,” Bloomberg, May 4, 2022, https://www.bloomberg.com/news/articles/2022-05-04/uber-beats-sales-estimates-delivers-upbeat-forecast


Pittsburgh

Century III Mall

Mark Belko, “Amazon might have its eye on Century III Mall, Galleria at Pittsburgh Mills sites,” Pittsburgh Post-Gazette, May 5, 2022, https://www.post-gazette.com/business/development/2022/05/04/century-iii-mall-galleria-at-pittsburgh-mills-amazon-west-mifflin-churchill-frazer-new-stanton-north-versailles-warehouse/stories/202205040074


COVID-19 Pandemic

Among high-income countries, the United States did the worst in terms of excess death rate. We have experienced disproportionately high excess death rates because of the way we handled the pandemic.[5]

But the world toll must be attributed in part to the claims of intellectual property.[6]

Katie Shepherd and Niha Masih, “Nearly 15 million deaths related to covid-19, WHO estimates,” Washington Post, May 5, 2022, https://www.washingtonpost.com/health/2022/05/05/covid-excess-global-deaths-nearly-15-million/


  1. [1]Tina Bellon, “Lyft shares tank 26% on higher cost of getting drivers back on street,” Reuters, May 3, 2022, https://www.reuters.com/technology/lyft-says-customers-spending-despite-inflation-results-top-targets-2022-05-03/; Jackie Davalos, “Uber Sidesteps Lyft’s Debacle With Optimism Over Riders, Profit,” Bloomberg, May 4, 2022, https://www.bloomberg.com/news/articles/2022-05-04/uber-beats-sales-estimates-delivers-upbeat-forecast
  2. [2]Hubert Horan, “Can Uber Ever Deliver? Part Twenty-Nine: Despite Massive Price Increases Uber Losses Top $31 Billion,” Naked Capitalism, February 11, 2022, https://www.nakedcapitalism.com/2022/02/hubert-horan-can-uber-ever-deliver-part-twenty-nine-despite-massive-price-increases-uber-losses-top-31-billion.html
  3. [3]Hubert Horan, “Can Uber Ever Deliver? Part Twenty-Nine: Despite Massive Price Increases Uber Losses Top $31 Billion,” Naked Capitalism, February 11, 2022, https://www.nakedcapitalism.com/2022/02/hubert-horan-can-uber-ever-deliver-part-twenty-nine-despite-massive-price-increases-uber-losses-top-31-billion.html
  4. [4]Jackie Davalos, “Uber Sidesteps Lyft’s Debacle With Optimism Over Riders, Profit,” Bloomberg, May 4, 2022, https://www.bloomberg.com/news/articles/2022-05-04/uber-beats-sales-estimates-delivers-upbeat-forecast
  5. [5]Steven H. Woolf, quoted in Katie Shepherd and Niha Masih, “Nearly 15 million deaths related to covid-19, WHO estimates,” Washington Post, May 5, 2022, https://www.washingtonpost.com/health/2022/05/05/covid-excess-global-deaths-nearly-15-million/
  6. [6]David Benfell, “The lethal dishonesty of ‘intellectual property’ in a pandemic,” Not Housebroken, November 30, 2021, https://disunitedstates.org/2021/03/21/the-lethal-dishonesty-of-intellectual-property-in-a-pandemic/

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