Comment by overthemoon
6 years ago
>> Uber Eats is Uber's "most profitable division” . Uber Eats lost $461 million in Q4 2019 off of revenue of $734 million. Sometimes I need to write this out to remind myself. Uber Eats spent $1.2 billion to make $734 million. In one quarter.
These might be stupid questions, but... can this go on forever? No, right? Is there precedent for this? How long of a horizon do companies like this expect to be a money toilet? What happens to everyone else if companies like this collapse? Why hasn't it happened yet?
The foundation is immense "VC" funds that are throwing money at (often "unicorn") businesses that are using the money to grow their currently unprofitable businesses. The premise is that, once they are big enough to drive all the competing businesses out of business, they will be able to transition to being profitable.
The poster child of these "VC" funds is Softbank.
The foundation is crumbling. https://www.cnn.com/2020/05/18/tech/softbank-earnings-intl-h...
When these companies collapse, the investment funding them will have to write down the losses the "unicorns" have built up, and there will be a lot of investors that will be sharing in that hurt.