Everyone's favourite Uber analyst, Hubert Horan, is back with another rip-snorter on Uber's Q4 2023 accounts, which were released on 8 February to great fan-fare. On that day, Uber announced it's first-ever annual profit in 2023, a milestone moment for the Silicon Valley gig economy giant, which had previously made $31 billion in losses from 2014-2022, the most loss-making tech start-up in history. But was Uber's breakthrough profit all that it seemed?Horan is emphatic that Uber only appears to have made a profit because the company's expensive accountants have been very creative. First of all, a major chunk of Uber's Q4 profit was derived from its equity stakes, especially in Chinese ridehailing firm 'Didi', which the company claimed had appreciated in value by $773 million since Q3 2023. But what was this based on? Horan believes the answer is: absolutely nothing at all."Uber made no effort to explain exactly how a company that had been delisted from exchanges, been blocked from adding new customers and abandoned by investors in the US could be confidently judged to [have] generated this much corporate value since September," he writes.Horan's assessment of the value of Uber's equity stakes is matched in more brutal language in a blog by journalist and author Cory Doctorow, who writes that Uber - "virtuosos of mendacity," according to Doctorow - tried to "run a business in those countries and it was such a total disaster that they had to flee the country, selling their business to a failing domestic competitor in exchange for stock in its collapsing business. Naturally, there's no market for this stock, which, in Uber-land, means you can assign any value you want to it. So that one quarter, Uber just asserted that the stock had shot up in value and voila, profit!" Back to Horan, and beyond the inflated equity stakes, he finds that Uber is using an accountancy method called “Adjusted EBITDA Profitability” which "does not measure either profitability or EBITDA and does nothing to help investors understand changes in Uber’s financial performance." To cut a long story short, Horan says that this method cuts 25% of Uber's total expenses from the calculations, and when those expenses are baked back into the figures the company isn't actually profitable at all."Uber’s deliberately opaque and misleading financial reports have always been designed to prevent mainstream business media reporters from understanding Uber’s actual performance, so that their stories are limited to Uber’s preferred PR narratives," he writes.Nonetheless, Horan does say that "Uber has significantly reduced its losses", and attributes this financial improvement to three factors: lower wages for drivers, higher prices for customers, and larger market share. We have written various times in this newsletter about the rise in Uber's 'take-rate' - commission per trip/delivery - and Horan re-affirms that it rose from 19% in 2021 to 28% in 2022. If this is how Uber's finances are improving, for that to go on the company will have to continually squeeze it's drivers and riders harder, but there are obvious limits to this: not least the resistance of Uber's workers, who have seen their pay fall while their costs are rising. "It is difficult to see how Uber could achieve the similarly large margin improvements in the next few years," Horan says. Horan finds that Lyft, Uber's US competitor, is struggling but is unlikely to go under any time soon. Thus, although Uber is taking a greater share of ridehail trips in the US, no knock-out blow is in sight. Horan doesn't talk about other markets but a similar picture is evident in many European countries, where Bolt and traditional taxis are key challengers. Whether the company is or isn't profitable at this very moment, it's path to the sort of sustainable profits that would justify its $67 billion valuation on US stock markets is not at all clear. Horan believes financial markets are mis-calculating the platform, wrongly believing it to be fundamentally different to the multitude of "narrative-driven startups" which have seen their value collapse, or liquidated all together, since the 'tech downturn' began in 2021. As it is, Uber is cock-a-hoop about the confidence financial investors are showing in it. On Thursday, the FT reported that CEO Dara Khosrowshahi had kept the company's market capitalisation over $120 billion for 90 days, enough to trigger a special bonus which allows him to buy stock in the company worth €136 million. The newspapers says it will cost Khosrowshahi $59 million to exercise the stock option, but that still leaves the CEO with a cool $77 million, and that's before his annual salary. If Horan is right and Uber is massively over-valued, then Khosrowshahi would do well to sell-off his tasty bonus stocks soon and make a sharp exit.Ben Wray, Gig Economy Project co-ordinator
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Gig Economy news round-up |
- TENSIONS BUILD AS CRUNCH PLATFORM WORK DIRECTIVE MEETING NEARS: The political pressure ramped up this week on the four EU states which have refused to back the Platform Work Directive (PWD), ahead of the crunch EPSCO Council meeting of Labour Ministers on 11 March. The European Parliament heard furious criticisms of the French and German Governments for their refusal to pass PWD on Monday [26 February] (read full report here). A France Insoumise MEP and Senator, Leïla Chaibi and Danielle Simonnet, also wrote an open letter to the French Minister for Labour, Health and Solidarity, Catherine Vautrin, urging her to back PWD when she attends the 11 March meeting. Meanwhile, Ben Ali Brahim, leader of the French INV union which organises Uber drivers, announced that he would be walking from 223 kilometres from Lille to Paris in protest at the French Government's stance on platform work regulation. As for the Belgian Presidency's efforts to turn a No into a Yes on the current text, sources report that it is proving difficult to budge the four states, although the possibility of the text being re-opened and re-negotiated with the European Parliament is still not entirely closed.
- Q-COMMERCE WORKERS FALL UNDER SUPERMARKET COLLECTIVE AGREEMENT, DUTCH COURT FINDS: Grocery delivery riders and dark store 'pickers' are covered by a sector-level collective agreement for supermarket workers in the Netherlands, a court in Utrecht found on Wednesday [28 February]. In 2021, Picnic, Flink, Getir, Gorillas (now owned by Getir) and Hofweb concluded an e-commerce collective agreement, but the judge found that the different business model of Q-Commerce platforms compared to supermarkets was not sufficient for them to be considered separately and that the supermarket collective agreement must now be applied retroactively, from September 13, 2022 to July 1, 2023. The supermarket collective agreement includes additional benefits for workers compared to the e-commerce agreement, such as evening and Sunday allowances. 'E-Commerce Netherlands', a body which represents grocery delivery platforms, said they would be appealing the decision. Bas van Weegberg, FNV union organiser, tweeted that the ruling was an "important victory" and that the platforms "simply have to pay allowances to their employees". Read more here.
- GLOVO HAD 12 FINES SUSPENDED BY SPANISH COURTS: Glovo, Spain's largest food delivery platform, had 12 fines for bogus self-employment suspended between November and January. The fines are worth a combined €67.3 million. El País' magazine 'CincoDías' has reported new details of the National Court's suspension of the fines, which includes that they will now incur a 10% interest rate (taking the final cost over €70 million) and that Glovo has had to provide guarantees that it will ultimately be able to pay up. Glovo has refused to employ its riders despite the passing of the Rider Law in 2021, which established a general presumption of employment in Spain's food delivery sector. The Labour Inspectorate has issued fines for bogus self-employment and back-dated social security contributions of more than €300 million to the platform, but the company is now struggling to pay. Glovo has cited an "extreme" financial situation, with a forecasted loss for 2023 of €209 million, half the loss the company made in 2022. An inability to access new credit and the collapse of the stock price of its parent company, Delivery Hero, were also cited as reasons for being unable to pay, with the company even stating that payment may push them into "insolvency proceedings". CincoDías reports that Delivery Hero has prepared to pay between €30-45 million every financial quarter to cover Glovo's fines. Read more here.
- FRANCE'S GIG ECONOMY 'SOCIAL DIALOGUE' SYSTEM SET FOR NEW ELECTIONS: Fresh elections will be held for the platform worker representative positions in France's controversial 'social dialogue' system for managing industrial relations in the gig economy. The first elections to the Employment Platforms Social Relations Authority (ARPE), which acts as a government arbitration body between the platforms and the platform worker representatives, were held in May 2022. They were marked by controversy due to the appointment of Bruno Mettling to run ARPE, who had previously written a report on behalf of Uber to a government consultation, and the role of Uber staff in acting as election agents. Some unions and worker collectives boycotted the elections and turn-out was very low at just 1.83% for couriers and 3.91% for drivers. However, ARPE has negotiated six agreements in the two years' since, including a guaranteed €11.75 per hour of activity for riders. That deal has been criticised by many unions due to the declining average pay which has accompanied it, with a major strike of riders taking place in early December. The new election is set for 22-30 May, while Monday [26 February] was the deadline to put forward candidates. The Collectif des Livreurs Autonomes de Plateformes (CLAP), which boycotted ARPE in 2022, announced that they were putting forward a candidate this time, stating: "After 2 years of repeated scandals at the ARPE, this cannot continue."
- UK RIDERS' STRIKE CONTINUES FOR HIGHER PAY: Food delivery strikes in the UK continued on Friday [1 March], as riders insist they will continue to take action until they win. The strikes, which began on 2 February, are grassroots organised and target all the major food delivery platforms in the UK: Uber Eats, Deliveroo, Just Eat and Stuart Delivery. Images on twitter show riders taking action in Reading and Perth, while in the West Midlands multiple McDonald's restaurants were shutdown. The riders have said they will strike every Friday and bank holiday until the platforms increase pay to a minimum of £5 per delivery. Meanwhile, one of the striking riders in London, Shaf Hussain, a member of the IWGB union, highlighted that Deliveroo were encouraging riders to work in dangerous torrential rain and wind by hiking up pay rates during extreme weather. "The only other time 'boost' is active like this is when they're trying to break strike actions," Hussain said.
Have we missed something important? You can help keep us informed by sending information to GEP@BraveNewEurope.com.
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Riders in the Smog
'Rest of World' equipped riders in South Asia with pollution monitors and found that they were routinely exposed to hazardous levels of pollution.
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- The WE-TRANSFORM final conference will be a hybrid event held in Brussels on 5 March. Click here for full details and to register.
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The Gig Economy Project is a media network for gig workers and we welcome contributions from workers, writers, academics, activists - anyone who wants to stand up for workers' rights in the gig economy.
If you would like to write for the site, discuss arranging an interview with GEP, or simply have information about developments in the gig economy in Europe you think we should be aware of, get in touch.
Contact project co-ordinator Ben Wray at GEP@BraveNewEurope.com or send a direct message to the Twitter: @project_gig.
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