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Comment by lhorie | Hacker News Reader

That's a somewhat outdated narrative to still be parroting.

Uber just got included into the SP 500. One of the pre-requisites for that is being profitable on a GAAP basis.

Which if I recall correctly they are only profitable due to a one time revenue boost right of something like hundreds of millions ?

And that one time "revenue" boost was that a company they own they are asserting is now valued more than last year. And they are calling that "revenue".

No, it's operating profit.

I took a look at a fool article. If you exclude the unrealized return from an investment they made, their profit are in the single digit millions. Not really confidence inspiring, but maybe I am wrong and that they could indeed make their business sustainable.

"could indeed make"? What's not sustainable about that level of profit? And aren't they still spending a lot on expansion?

It implies that their margin is really low. We're talking about revenues in hundred of millions and they're only able to make single digit millions.

Next quarter, their margin might entirely be wiped out by a slight downturn in business. If they could increase their margin and make profit consistently, then I'll change my mind.

Is a particularly big percentage of their costs fixed? Because that affects the math a lot. If we consider a generic slightly-profitable company facing a 25% revenue drop, there's a huge gulf between a world where costs drop 10% and a world where costs drop 22%.

>One of the pre-requisites for that is being profitable on a GAAP basis.

Uber lost money for 22 straight quarters, then made money for the last two. Bit optimistic to think it's smooth sailing from here, in my opinion. I enjoy Uber, the product, but they are middle manning a couple of low margin industries. Hard to imagine it being a multi-hundred-billion dollar company.

> That's a somewhat outdated narrative to still be parroting.

It's not. Most of those "innovators" are still posting losses in the hundreds of millions

> Uber just got included into the SP 500. One of the pre-requisites for that is being profitable on a GAAP basis.

Because you can somehow lose a billion dollars a year for 10 years, become a publicly traded company with a steatement "we don't even know if we'll ever turn a profit", still continue operating at a huge loss for several years, write off 6 billion in losses, and finally become profitable enough to be included in S&P.

Any any other, sane world, Uber would be gone after two years of losing a billion dollars a year. Not crawl into S&P after 10 years of unsustainable losses.

I don’t have much dog in this fight, but it seems as if Uber’s losses were self-evidently sustainable.

> it seems as if Uber’s losses were self-evidently sustainable.

With the unlimited free investor money. Same goes for the rest of "amazing starup innovators" of recent years (e.g. YCombinator's startups). The flow of money has now stopped/slowed, and we now see mass layoffs and a wave of bankrupcies.

Losing a billion dollars a year for 10 years is not a sustainable business. But somehow it has become the norm in IT.

I mean, Enron was in the S&P 500, too.

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