Uber appears to be going down

The news that Uber has stopped hiring engineers (except in its self-driving car and trucking divisions)^[1] follows large reported losses^[2] and cuts to its marketing staff.^[3] I reacted to news of the marketing staff cuts in a blog post entitled “Watching the ridesharing shit go down the toilet.” Apparently,

Uber is in no immediate financial danger. Despite years of losses, Uber had $13.7 billion in the bank at the end of the second quarter—a figure boosted by $8 billion in Uber’s IPO. With that much cash in the bank, Uber can continue at its current burn rate for more than two years.^[4]

But those of us who survived the dot-com crash will remember that companies closed whether they had good business plans or not. Uber has a spectacularly lousy one^[5] and it very much appears that people just aren’t buying its bullshit.^[6] The news comes in the context of a possible recession that may be occurring due to multiple causes^[7] and which could well spook investors.

Substantively, Lyft really isn’t any better. It faces all the same problems except one: Investors are buying Lyft’s bullshit.^[8] That might be the difference that enables Lyft to survive a little while longer. At least until the markets capitulate to a possible and arguably probable recession.^[9]

1. ^[1]Timothy B. Lee, “Uber, losing billions, freezes engineering hires,” Ars Technica, August 9, 2019, https://arstechnica.com/cars/2019/08/uber-freezes-engineering-hires-amid-mounting-losses/↩
2. ^[2]Eliot Brown, “Uber Posts Its Largest Quarterly Loss,” Wall Street Journal, August 8, 2019, https://www.wsj.com/articles/uber-posts-its-largest-ever-quarterly-loss-11565295373↩
3. ^[3]Eliot Brown and Sarah Nassauer, “Uber Cuts Third of Marketing Staff; Lyft Chief Operating Officer Exits,” Wall Street Journal, July 29, 2019, https://www.wsj.com/articles/uber-cuts-third-of-marketing-staff-lyft-chief-operating-officer-exits-11564430556↩
4. ^[4]Timothy B. Lee, “Uber, losing billions, freezes engineering hires,” Ars Technica, August 9, 2019, https://arstechnica.com/cars/2019/08/uber-freezes-engineering-hires-amid-mounting-losses/↩
5. ^[5]Eliot Brown, “Uber Wants to Be the Uber of Everything—But Can It Make a Profit?” Wall Street Journal, May 4, 2019, https://www.wsj.com/articles/uber-wants-to-be-the-uber-of-everything-11556909866; Ryan Felton, “Uber Is Doomed,” Jalopnik, February 24, 2017, https://jalopnik.com/uber-is-doomed-1792634203; Yves Smith, “Uber Is Headed for a Crash,” New York, December 4, 2018, http://nymag.com/intelligencer/2018/12/will-uber-survive-the-next-decade.html; Julia Carrie Wong, “Disgruntled drivers and ‘cultural challenges’: Uber admits to its biggest risk factors,” Guardian, April 12, 2019, https://www.theguardian.com/technology/2019/apr/11/uber-ipo-risk-factors↩
6. ^[6]Eliot Brown, “Uber Posts Its Largest Quarterly Loss,” Wall Street Journal, August 8, 2019, https://www.wsj.com/articles/uber-posts-its-largest-ever-quarterly-loss-11565295373↩
7. ^[7]David Benfell, “Forsaken,” Irregular Bullshit, August 9, 2019, https://disunitedstates.com/2019/08/09/forsaken/; John Kemp, “Global economy is probably in recession,” Reuters, August 7, 2019, https://www.reuters.com/article/uk-global-economy-kemp/column-global-economy-is-probably-in-recession-idUKKCN1UX1OF; John Kemp, “Global economy is probably in recession,” Reuters, August 7, 2019, https://www.reuters.com/article/uk-global-economy-kemp/column-global-economy-is-probably-in-recession-idUKKCN1UX1OF↩
8. ^[8]Eliot Brown, “Lyft Raises 2019 Revenue Outlook and Sees Smaller Annual Loss,” Wall Street Journal, August 7, 2019, https://www.wsj.com/articles/lyfts-raises-2019-revenue-outlook-and-sees-smaller-annual-loss-11565208387↩
9. ^[9]David Benfell, “Forsaken,” Irregular Bullshit, August 9, 2019, https://disunitedstates.com/2019/08/09/forsaken/; John Kemp, “Global economy is probably in recession,” Reuters, August 7, 2019, https://www.reuters.com/article/uk-global-economy-kemp/column-global-economy-is-probably-in-recession-idUKKCN1UX1OF↩