But they do have to prove they've lost money as a result. Maybe they have too - but it ain't proven yet, is it, as they've not yet had a down round.....
Uber's wild ride-sharing past has returned to haunt the biz in the form of yet another lawsuit in the US. On Tuesday, the Texas-based Irving Firemen's Relief & Retirement Fund filed a complaint [PDF] against the app maker and its former CEO Travis Kalanick for making false statements about the transport platform's success to …
They can prove they've lost money (that's just basic share price arithmetic) and they can also prove what caused it. What the plaintiff still needs to establish is intent. The obvious defence is for Uber to prove that Kalanick isn't a crook, he's just an incompetent jerk with the self awareness of a paving slab and the social skills of an incontinent baboon. That should be amusing to watch.
I am rather leery about lawsuits of this type. Any COMPETENT investor knows that the stock market is not a guarantee of growth, and that loss of valuation does not equal a loss of investor capital. In this case, Uber is private and untraded - thus public market valuation is in essence meaningless and until they sell their private stake they have not suffered an actual loss. As a privately held company transfers probably require approval of the board, which they won't give, thus they can't sell the stock and thus prove a loss. Even if they did, they would voluntarily be taking the loss so the onus would still be on the firefighter's union.
Such is the nature of private equity - there is no sure thing and they gamble with someone else's money. The payoff can be huge -- but you are far more likely to lose money than to make it.
Yes, Uber had some dark secrets behind closed doors, but as it is a private sale it is up to the buyer to do due diligence - diligence that by the nature of the lawsuit they apparently failed to do. They will have to show that Uber's public written statements were knowingly and materially false AND that they relied upon those false statements to invest the money. The burden of proof is on the Firefighter's union, and by going on record like this they have actually opened themselves up to lawsuit by the members whose money they invested. Time to break out the popcorn.
Uber's been spewing obvious lies for years, they're world-famous for flaunting laws and regulations in multiple countries and municipalities, and their business model just doesn't make sense in the long run anyway: they lose money on every fare, and there doesn't seem to be any reason to expect that to change. I have little sympathy for anybody who tried to ride that bubble and then pretends to be surprised that they ended up sitting on the ground with nothing but a wet bum.
Uber is like the underpants gnomes. Except meaner. To _everybody_.
What lies? Seriously. Uber's claims, as listed above, are 100% indisputable, as far as they go.
Of course they're one-sided, self-serving, and ignore a lot of boring details about so-called "laws" and "decency" and "profits", but what else do you expect from a prospectus?
So fantasy losses.
The pitch was more like
"It'll cost a bit but we'll be able but by the end we'll most of the taxi business in most of the world. We'll be the Amazon of the taxi business and then you'll really see some money being made."
Note that at no time did I mention the word "monopoly" in this because that would be, y'know, illegal.
TL;DR Vulture capitalist thinks they got high investment/low risk/high profit deal. They didn't.
Vulture capitalist thinks they got high investment/low risk/high profit deal. They didn't.
If you're referring to the VCs, do we know that they didn't get the returns they wanted? Depends on what they invested, and whether they have yet "exited", or still can in the future.
Without an IPO there's no liquid market, but VCs often trade with each other (and other large investors) in secondary buyouts and the like. I don't know any relevant facts, but it is possible that the earliest VC investors in Uber have long disappeared into the sunset with a ten fold return on their investment, and the patsies are those who were holding off until an IPO could be launched.
... who parked USD $18 BEELION of retirement money into Uber?
Are you kidding me? They put $18 BEELION of people's retirement and pension money into a cab-hailing Silicon Valley bullshit startup company?
They would have been better off putting all that money into money market funds or 6-month CD's. At least they wouldn't have lost anything, except inflation.
It's the investment manager that should be sued for dereliction of duty.
How about starting off by clawing back all the investment managers' bonuses to the fund. That would be a good start. Something tells me that these bonuses were quite fatty.
and they're suing for being 'lied to'.
1. It's an ar*e covering exercise.
2. Uber will need to settle to make it go away before they can float.
From an investment managers viewpoint I wouldn't be surprised if they hadn't planned for this before they invested, if they'd factored it in to the valuation they were working on it's upside only when companies get to a certain size/momentum and there's too many big hitting VCs in Uber to allow it to completely fail. More likely the VCs will take indirect control.
"This is a pension fund, right? They're supposed to be cautious and mindful with other people's retirement money. Where exactly does Uber figure in this picture?"
It doesn't figure nearly as much as you'd think. The problem with pension funds is that the people making the investment decisions get paid, and get paid plenty, out of your carefully-saved money, whether or not the return is positive. They may get *more* if the investment does well, but if it does not—if an Uber happens, or there's a banking crash, recession or whatever—then *you* are the one who really takes the hit.
If you wanted a really prudently-managed pension fund, you'd ensure that the people making the decisions had their own money at stake, so that if they bad a really bad or greedy call, they'd be first to suffer.
>They're saying the total value has fallen up to $18bn and their investment has fallen pro rata to that.
Interestingly, having scanned the PDF complaint, there is one reference to an 'interest' but no mention whatsoever of the amount paidout to secure that 'interest'.
It seems they are trying to go for a violation of the California Corporations Code, but the complaint isn't clear on this.
Perhaps someone could enlighten us as to what might happen if Uber were found to be in breech of the Code.
Uber has no real assets, it has some clever people who developed a taxi-app. It has taken billions in investment, has $5bn turnover BUT it hasn't made a cent in profit yet, apparently it's running at a $2.8bn loss. So in whose fevered mind does this merit a $70bn valuation and why would a pension fund invest in a company that has never made a profit?
>So in whose fevered mind does this merit a $70bn valuation
There are a series of readable articles here: http://aswathdamodaran.blogspot.co.uk/search?q=Uber
that discuss the valuation of Uber.
>why would a pension fund invest in a company that has never made a profit
Depends on the size of the fund and the size of the investment...
I can see a fund having a relatively small - say 1~2% of the fund in very high-risk investments, which may include seed funding in startups, however I would not expect all of that high-risk investment to be in a single company. Hence why I'm interested to know just how much they did invest.
I posted this on another Uber thread, reposted here for thoughts.
By far and away the biggest single removable cost item from cabbing (be it Black Cabs, Uberites or Mini Cabs) is the driver.
If you take some conservative numbers.....
Let's say London has 105,700 cabbies in total.
40,000 Uber (Ubers own numbers)
21,000 Black Cabs (TfL Numbers)
84,700 Licenced Cab Drivers 2015 (Govt report linked below) subtract the 40,000 Uber = 44,700 (non Uber)
The 'average' London Black Cab makes around £40-50,000pa after tax and costs. Let's take the lower figure of £40,000 and multiply by number of cabs 21,000 = £840m pa. The tax revenue from that is probably in the order of another £400m pa (Income Tax, VAT, Petrol Taxes).
There's no firm number for Mini Cabs and Uberites, but let's say they make £25,000 per year after expenses and Tax. £25,000 x 84,700 = £2.12Bn the tax revenue from that as per above is say £1bn.
I realise these numbers are highly subjective and we've all seen the stories of Black cabbies making £90k per year etc....for the purposes of this lets keep number conservative.
So there's about £3bn of removable costs and the consequential loss of a further about £1bn tax revenues.
If anyone thinks that Uber isn't trying to dominate the market now, to ensure they get the lions share of £4bn a year flowing to their San Francisco base, while only paying a tiny amount of Corporation Tax, you're not really paying attention.
This is just one (admittedly big global) city. Worldwide we're probably talking 10-20m drivers who could be replaced by driverless cars.
If they pull it off the $70bn valuation will look cheap.
I'm thoroughly sick of seeing advice of this kind : "Warning, investments in equity based products may go up or down in value".
So the (ahem) professionals of the Fireman's Fund should have known better. Especially with an investment of this nature.
as ST alludes to above, they get their personal rewards regardless.So should make their own contribution to the shortfall.
And yet, they continue to makes losses which means they are still able to borrow money. Or more likely the equally scumbag Hedge Fund/Venture Capitalists who are from the same crap filled pond think they can make money.
If this was not a Silicon Valley Ponzi scheme it would have been a failure years ago.
I must admit to having a chuckle at all the news surrounding Tfl's cancellation of their license, the whole "sky is falling" noise: people face unemployment and hardship, life will become soo difficult for Londoners etc etc. Just as if there is no alternative out there like Lyft et al who happen to demonstrate it's perfectly possible to deliver what Uber does WITHOUT any need to break the rules.
I am admittedly sometimes easily amused, but the punditry and misinformation surrounding that (IMHO fully justified) decision reached levels heading into comedy, and, to be honest, I have no expectation of any reversal of that decision. Uber knows the rules and thought it could ignore them (which is part of its culture), so it has been told to piss off. Nothing wrong with that.
Uber claim "We are not a taxi firm," was BS the day they accepted this was necessary.
The rest is just the Universe catching up.
Once you know they are predatory pricing to drive competition out of the market you know they are monopolists at heart.
They want to be Amazon.
But in the UK they look a hell of a lot like "Stagecoach," or as I like to think of them "Highwayman."
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