Uber Exposed: The Death of Ridesharing
06/13/2022
This week we tackle a topic that I’ve repeatedly bashed during livestreams: the stupidity of Uber’s business model.
After a massive decline in the stock price, I wish I had gotten around to writing this one sooner, but I believe the pain is only just beginning. Silicon Valley bullshit stories are unraveling left and right, and Uber is just the tip of the iceberg.
Again, this gets back to what we discussed several weeks ago. Much of the “disruptive innovation” emanating from Silicon Valley is not particularly innovative, and only disruptive insofar as one’s wallet is concerned.
Alright. Enough bashing for now. Next week, we’ll get more into some of the opportunities that have emerged in today’s interesting investing landscape.
Peace out.
Mike
Featured Article
Uber Exposed: The Death of Ridesharing
by Mike, Tycoonist Creator
With a $46B market cap, Uber is one of the most successful unicorns ever to emerge from Silicon Valley. The stock might also be worthless.
Analysis: In a series of articles going back six years, transportation consultant Hubert Horan destroys the bull case for Uber, demonstrating that Uber’s business model is fundamentally uneconomic and not even particularly innovative.
Compared to traditional taxis, Uber is a higher cost, less efficient producer.
Uber’s dubious “success” has mostly come down to massive investor subsidies and driver exploitation, both of which are going away due to market conditions.
Endgame: It is difficult to see how Uber, which has never generated an operating profit in 13 years of existence, can survive in its present form.
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News, Memes, and More From Around the Internet
The Man Who Predicted the Inventory Glut
Retail
"It’s possible that 2022 will be a very difficult and turbulent year across the retail industry.”
Back in the October 2021 “How the Supply Chain Stole Christmas,” we discussed Burlington Stores ($BURL) CEO Michael O’Sullivan’s prediction that supply chain problems would lead to an inventory glut and “huge disruption” in retail.
It was a ballsy, contrarian call at a time of soaring retail profits—but he completely nailed it.
Target’s ($TGT) profitability imploded last quarter, partially as a result of delayed inventory hitting the shelves just as consumer demand for buying shit fell off a cliff.
What’s Next: Sullivan also noted that “difficult turbulent years in retail are often very good for off-price.” Unsold inventory could make its way to discounters such as Burlington Stores, T.J. Maxx ($TJX), and Ross Stores ($ROST).
No, Gas Stations Are Not Gouging You
Energy
In yet another example of energy ignorance, a recent poll shows that Americans broadly support banning gas stations from price gouging (Congress is currently weighing a bill to that effect).
Reality: The retail markup only accounts for about 12% of the price at the pump. In fact, a fascinating Barron’s analysis shows that gas station profitability have actually declined due to competition.
Despite the gas station being named “Mobil,” it actually has nothing to do with energy giant Exxon Mobil. Oil companies merely license their brand names to gas station operators, most of which are local small businesses.
Memes and Sarcasm
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