Yes, they can cut their burn rate.

But if they cut it too much, they'll stop growing.

The problem is they need to sustain their 70 billion dollar valuation for investors to be happy.

To be worth 70 billion they have to be either:

Growing at a very fast rate (which requires a very large burn rate to sustain)

Or be generating billions in profit each year. Even with a cut burn rate, they aren't going to be generating billions in profit. So they won't be worth $70 billion.

Keep in mind that if their leaked financials are to be believed, they made $6.5 billion in net revenue for 2016. Unfortunately total costs exceed revenue, so they are far from profitable, but that's not exactly chump change.

What are they counting in net revenue? As they bill themselves as a brokerage service (to avoid those pesky employment laws...), I would imagine they only count their commission in net revenue? 6.5 billion is pretty impressive then!

They included all of the revenue (i.e. gross revenue) from Uber Pool in that figure.

> and 95% of their drivers left, then 5% of their drivers would remain and they would be profitable... where does the "killing" of Uber occur?

People will stop using Uber if the wait times get really long, which they will if most of the drivers leave.

If 95% of their customers left, then 5% of their customers would remain and... Well, if they shut off 95% of their servers... Are we profitable yet?

It's probably eminently practical for a company of this type to cherry pick the most profitable core areas of the most profitable urban areas. Which is effectively what services like Instacart do. But it's not scalable and won't command a high valuation.

Just making a profit isn't enough; they need to make a big profit. Kalanick could probably turn a profit if he fired the whole company and drove a cab himself, but that's not gonna placate the investors who sunk hundreds of millions into it.

Nope. They're subsidizing most trips in order to keep prices low.

Their profitability problem isn't just one of opex. They don't have margin, either.

obviously the least price-sensitive 5% would remain. it's not like they're running currency exchange or something - people don't have a super set demand curve. maybe 95% of their customers do, but not 100% of their customers... (unlike a currency exchange, for example, which would drop to precisely 0 users worldwide if it increased prices by just 10%, since 100% of any such users are super price-sensitive. likewise if a currency exchange subsidized exchanges by 10% it would have more users the next day - by far - than people on Earth. easily a trillion "users", or whatever the rate limit is for signing up and performing exchanges. try to visualize these two different demand curves and you will see that Uber should still have some users if they raise their prices, because not all of them are completely price sensitive and only use it because it subsidizes rides, and not for any brand or convenience reasons. unlike a commodity currency exchange which exists under ironclad demand curves that drop to 0 if you move along it even slightly. picture these curves.)

Can you provide a source for this? I'm honestly very curious. I've seen this claim bandied about for years, but I've never seen a source that verifies it. Is Uber really losing money on a marginal basis in developed markets?

Here's an article with citations from November of last year. Note that it does use data from 2015, since at the time that was the most recent publicly-available published data.

http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver...

Thanks, this is terrific.

My main takeway: revenues are higher than their cost of sales. In other words, they are earning money on marginal rides served. Not losing money.

To me, this suggests that profitability is plausibly achievable if they end subsidies into small markets and drastically cut development costs.