| > We see 1.44 billion monthly active users. That translates to about $12 a year per user. No, the $4 Billion in revenue was last quarter. In other words $48/user annually, not to mention the huge growth of even that number. That's why its market cap is ~$300 Billion. > Twitter can't break even. They report 320MM monthly active users which means they're pulling in about $7 per user per year in revenues, less than Facebook, and with a growth curve that's even more alarming. Twitter could fire 90% of its staff today and keep bringing in that same amount of revenue, being wildly profitable. But it doesn't because it's still trying to grow quickly. It also just barely started turning on revenue. You're actually the one thinking about this the wrong way. Profit alone is just a bad way to value quickly growing companies, as it never carries all of the nuance (see Amazon - http://a16z.com/2014/09/05/why-amazon-has-no-profits-and-why...). You're also not appreciating the growth. There's a reason PG says "startups = growth"; because growing 25% month over month compounds and gets really big really fast. > And, mark my words, in 5 years [uber] will be shut down by regulators and class action lawsuits as folks realize they're making $10B a year on the backs of illegal contract workers. In most cities they're not "illegal contract workers" even today. I'd bet good money that in 5 years few, if any cities, would call Uber drivers "illegal contract workers." |
Yup, that's my bad, sorry.
That said, unless they can continue to grow that number, their trajectory is based on subscriber growth, and that must necessarily flatten out.
Profit alone is just a bad way to value quickly growing companies
Agreed.
But a company that can't not lose money is not well positioned.
And the fact that Twitter's growth trajectory has flattened out only makes me more nervous.
In most cities they're not "illegal contract workers" even today
You're right.
They're illegal across the country according to federal labor regulations.
Uber and its ilk are almost certainly illegally classifying their workforce as contractors when they should be employees. It's actually a really easy line to cross, and if you ever work as an independent contractor, it's worth familiarizing yourself with the regulations as it obviously has significant tax implications, among other things.
This is the basis for this class action: http://uberlawsuit.com/
When that hammer comes down, Uber's profits will evaporate. They're also very likely to face similar legal action in other countries with similar labor protections (e.g. Canada).
And that's ignoring their violating taxi regulations all over the place (though I admit I have more sympathy for them in that regard, as I generally view those regulations as anti-competitive).