Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Grocery WarsMarket InsanityThrift

Uber Lost $1.27 Billion in Six Months, Kroger Undercuts Walmart

Uber may not be the money-making machine that investment bankers claim it is. The transportation app company lost more than $750 million in second quarter 2016 and $1.27 billion in the first half of 2016, Bloomberg reported.

Disturbingly those admissions were made by Uber’s head of finance, Gautum Gupta, in a conference call with investors, Bloomberg Technology revealed. If these claims are true the scope of Uber’s losses is absolutely staggering.

Some of the highlights of Bloomberg’s revelations include:

  • Uber lost around $520 million during first quarter 2016.


  • Uber lost $100 million on its operations in the United States during Second Quarter 2016.


  • The value of Uber bookings grew by $1.2 billion between first and second quarter 2016 rising from $3.8 billion to $5 billion.


  • Uber’s revenue grew by around 18% during the same period, rising from $960 million to $1.1 billion.


  • Uber lost $2 billion in 2015.


  • Uber’s losses might be the biggest in the history of unicorns. Losses that big haven not been seen since the boom at the turn of the 21st Back then two now defunct unicorns; Webvan and, each lost around $1 billion.


  • Uber’s losses exceed those of Amazon (NASDAQ: AMZN); which lost $1.4 billion in 2000, its worst year.


  • Uber lost $2 billion or $1 billion a year in China for the past two years, Bloomberg reported.


  • Uber has around $8 billion in the bank.


Uber is not the only ride-hailing solution losing vast amounts of money. Lyft was losing around $50 million a month, an earlier Bloomberg story from April indicates.

These revelations raise serious questions about Uber, ridesharing, the new tech boom and app based technologies. It looks as if the Gig Economy is built on very shaky ground that can give way at any time.

Serious changes to Uber’s business model might be necessary for the company to survive. One has to wonder how long investors can keep dumping venture capital into Uber.

Most importantly we should ask how long would Uber survive if the investment bankers were to turn off the venture capital? A strong possibility that Uber can only survive with subsidies provided by investors without them it might collapse quickly.

Is Kroger Beating Walmart in the Price Wars?

Kroger (NYSE: KR) might be beating Walmart (NYSE: WMT) in the grocery wars. The grocery giant quietly cut prices on 1,000 products at 120 stores in the Mid-Atlantic region. The price cuts may have matched or even undercut Walmart’s.

The price cuts were uncovered by grocery analyst David Merrefield, in a piece for The Robin Report. Merrefield believes that Kroger is now successfully undercutting Walmart’s prices. Merrefield did not name the specific Kroger brands involved, but both Harris Teeter and Kroger stores operate in that region.

“Kroger has been able to come close enough to Walmart’s pricing structure to remain competitive, outperforming any of its industry peers,” Merrefield wrote.

The price cuts were impressive because Kroger delivered them through largely unionized markets with high labor costs. If this is true it looks as if Kroger has reached a level of logistics efficiency that rivals that of Walmart. It’s particularly bad news for dollar stores and Target (NYSE: TGT) which are having a hard time keeping up with Kroger’s prices.


Merrefield a former Supermarket News editor, thinks that Kroger’s private label brands are a secret to its success. He believes they position the grocer to complete with both upmarket stores like Whole Foods (NASDAQ: WFM) and bottom feeders like Aldi.

One person who has noted Kroger’s recent success is Walmart CEO Rodney McMullen. Walmart should be particularly worried because Kroger has recently entered the Wisconsin market and is poised to enter some new regions including the Northeast, Florida and Minnesota. It is also a great position to increase its share of sales in existing markets like Denver and Southern California.

“We don’t take Kroger’s success for granted—not for a second,” McMullen admitted. Investors should take note, Kroger and not Walmart is now the leader in the grocery segment.