Companies love to obfuscate specifics; journalists often err on the side of caution. And sometimes readers are the most equipped to cut through the nonsense. Such it was with one comment on the Financial Times’ story about Uber’s newly revealed IPO prospectus.
The original document went into painstaking detail about the company’s financials–of course, trying to spin it in the most positive light so it could attract as many investors as possible. The reality about businesses like Uber, however, is that they are not making money. Uber, in fact, reported a loss of $1.8 billion in 2018.
The FT’s story was exhaustive. It used graphics to illustrate all the data Uber provided in its IPO document. The prospectus not only highlighted Uber’s ride-hailing services, but talked about its other potential businesses, including food delivery and logistics.
But one FT commenter was able to succinctly paraphrase the nearly 300-page document in only a few sentences. An account by the name of “horsesatemymoney” provided this analysis:
Abbreviated version of prospectus
We don’t make money
We probably will never make money
Our current business relies on shareholders to fund cheap cab rides in the hope that regulators will let us become a monopoly and charge whatever we want but the regulators are not playing along
We have therefore spent more money expanding into other low margin highly competitive activities like food delivery or trucking despite there being lots of specialist logistics firms so not obvious how we are going to make any money there either
We hope in the future there will be driverless cars and that we can then make money because no drivers but other people are developing them too
We have annoyed lots of regulators so we have lots of disputes and problems with regulators
We don’t pay much tax and have done lots of aggressive tax planning and so we have lots of disputes and problems with tax authorities
We don’t employ anyone (or we say we don’t) but we have lots of de facto employees and so we have lots of disputes and problems with drivers and employment tribunals
We don’t actually own many assets because we managed to get our drivers to provide their own cars
We have an app but other cab companies also have apps
Current investors want to get out and so we hope you will buy some shares anyway because you have heard of us also we need more money to fund the businesses that don’t make money
We are expanding into more business lines that don’t make money and we need more money to fund those
We are really big and you have heard of us plus we say we are a tech disruptor so don’t worry that we make no money it will all be great because you will be an Uber investor
There you have it: Uber’s IPO story unvarnished. So many unprofitable businesses are trying to spin their financials to tell the world something that’s not quite true. And one FT reader was able to perfectly explain the subtext.
For us journalists, we often struggle to straddle the line between analysis and pontification. We may believe that a company is hiding something in thousands of words, but we often try to remain balanced and nuanced. In this case, the FT did a great job; it went through Uber’s documents and provided both an explanation and context. At the same time, horsesatemymoney was able to provide the added service of cutting through the bullshit.