News Flash: Uber Bonds Term Sheet Reveals $470 Million in Operating Losses

Sum and Substance: Bloomberg reports: Uber Bonds Term Sheet Reveals $470 Million in Operating Losses - "Uber Technologies Inc. is telling prospective investors that it generates $470 million in operating losses on $415 million in revenue, according to a document provided to prospective investors. The term sheet viewed by Bloomberg News, which is being used to sell $1 billion to $1.2 billion in convertible bonds, doesn’t make clear the time period for those results. The document also touts 300 percent year-over-year growth. The figures show the heavy losses that Uber is accruing as it expands its global car-booking operation amid fierce local competition. “These are substantially old numbers that do not reflect business activities today,” Uber spokeswoman Nairi Hourdajian said in an e-mail. Hourdajian declined to say why the numbers are being used to promote a current funding round."

My Take: Finally, we've got some hard, cold numbers on Uber's operations and they do not look good on the surface. It's what's beneath the numbers that's more important. For example, a $470 million operating loss can be viewed positively – as a sign of boldness. But can also be seen as a sign of recklessness and financially prolificacy. Essentially these numbers affirm what most have suspected about Uber's management team. They're risk takers. They continue to double down on their bets that geographic saturation and network effects are the long term keys to success in the rideshare business. The most glaring omission from this Bloomberg scoop is the time frame for the numbers. If they're for one quarter of 2014 then Uber has an annual burn rate of almost $2 billion - a very scary number. If they're for the entire year, then it means Uber's annual revenues are not particularly impressive - $400 million plus. Either way this term sheet should raise all kinds of questions. How and when will Uber start generating a profit? Is Uber's business model flawed? Will Uber's aggressiveness come back to haunt the company and investors? One can only hope that Uber's executives and investors know something that these numbers don't reveal. After all there a lot of smart people who continue to place their bets on Uber. Skeptics will use the $470 million loss as Exhibit A in their case that we're now officially in a tech bubble. Believers will shrug it off, just as they shrug off all the rest of the bad news about Uber. One thing is for sure, the skeptics and the believers can't both be right. In the end, some people are going to come out of this looking very smart and others will look really stupid.