site banner
PaperclipPerfector  4mo ago (text post)   2427 thread views

Small-Scale Question Sunday for December 22, 2024

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

Culture war topics are accepted, and proposals for a better intro post are appreciated.

2
Top Bottom Old Controversial Comments
Jump in the discussion.

No email address required.

Does anyone have insight into the business model of food delivery apps? (Doordash, UberEats, Deliveroo, etc.)

Right now, I can order restaurant food delivered at half price with a coupon deal, maybe 60% after the driver's tip. In order to qualify for the deals, I must have it delivered, so if I want half price food from the Thai place on my block, I have to go through one of the apps and get some international student (always an international student) to go in and pick it up, then ride his (always his) scooter ~100m around the block and hand it to me.

I would prefer to pick it up myself, but this invariably voids the deal, and it doubles in price.

Who is paying for this absurdity?

  • It can't be the restaurant. Restaurant margins are notoriously thin, and if they could be doing a pad see ew at $7, not $15, I'm sure the normal price would be lower. I can't get the deal direct through the restaurant either. Has to go through the app.
  • It can't be the delivery person. Even if they're getting paid literally nothing but tips, I'm still saving money on the food. Also, my area has a minimum wage law, which means they must be getting at least that much when they're on the clock.
  • Must be the app companies, right? I'm eating VC capital for dinner every night, and it's cheaper than cooking for myself. But how is this at all sustainable? The restaurants and delivery drivers use all the apps, so they're not capturing market share. They're just burning money. Are they stupid?

It's VC/investor capital.

For example, in its existence as a company, Door Dash has lost over $5 billion.

Nevertheless, their stock is valued at $70 billion (as compared to $7 billion for U.S. Steel) and is up 70% year to date. So clearly someone thinks that, any moment now, they are going to turn the corner and become profitable.

I think they're wrong, but what do I know?

Note: $DASH can actually lose money for eternity and be fine as long as they continue to find new suckers index fund investors to keep buying their stock. In the last 3 years, they've increased their share count by around 20%. They can sell stock and recoup more than the losses from their businesses. It's kinda a ponzi.

I wonder what an "S&P 500, but weighted by profit rather than by market capitalization" index fund would look like.

It probably wouldn't look too different. Most of the megacap tech companies are very profitable. And the S&P 500 already has a profitability filter that keeps out the worst garbage.

On the other hand, something like 40% of the Russell 2000 companies (ranked #1001–3000 by market cap) are unprofitable. A significant percent are essentially zombies, kept afloat by cheap debt and shareholder dilution.

In the last 20 years, stock market breadth has been decimated by software eating the world. I wouldn't be surprised if software has captured >100% of the increase in corporate profits in the last 20 years, with non-software being in a deep depression.

It probably wouldn't look too different.

Actually, according to this (not-very-trustworthy-looking) website, it would look quite different.

Very lazy assessment of the 28 companies that are in the top twenty of either capitalization or profit

Some notable differences:

  • Apple: 12.9 % of capitalization, 6.5 % of profit (6.4-% decrease)

  • Nvidia: 11.2 % of capitalization, 4.0 % of profit (7.3-% decrease)

  • Microsoft: 10.9 % of capitalization, 6.0 % of profit (4.9-% decrease)

  • Amazon: 7.9 % of capitalization, 3.4 % of profit (4.6-% decrease)

  • Saudi Aramco: 6.0 % of capitalization, 12.0 % of profit (6.0-% increase)

  • Berkshire Hathaway: 3.3 % of capitalization, 7.6 % of profit (4.4-% increase)

  • CEMIG: 0.0 % of capitalization, 14.2 % of profit (14.2-% increase)

  • Toyota: 0.8 % of capitalization, 2.3 % of profit (1.5-% increase)

If you pick the most extreme companies by any two metrics, even highly correlated ones, they'll exhibit that kind of divergence, because the tails come apart (you'll also select for anomalies like data entry errors or fraud).

No, this isn't accurate.

Saudi Aramco, CEMIG?, and Toyota are not members of the S&P 500.

Also, the numbers for CEMIG defy logic and are likely the result of some sort of currency translation or data entry error.

Sincerely and Bah Humbug! -Ebeneezer Scrooge

What is this place?

This website is a place for people who want to move past shady thinking and test their ideas in a court of people who don't all share the same biases. Our goal is to optimize for light, not heat; this is a group effort, and all commentators are asked to do their part.

The weekly Culture War threads host the most controversial topics and are the most visible aspect of The Motte. However, many other topics are appropriate here. We encourage people to post anything related to science, politics, or philosophy; if in doubt, post!

Check out The Vault for an archive of old quality posts. You are encouraged to crosspost these elsewhere.


Why are you called The Motte?

A motte is a stone keep on a raised earthwork common in early medieval fortifications. More pertinently, it's an element in a rhetorical move called a "Motte-and-Bailey", originally identified by philosopher Nicholas Shackel. It describes the tendency in discourse for people to move from a controversial but high value claim to a defensible but less exciting one upon any resistance to the former. He likens this to the medieval fortification, where a desirable land (the bailey) is abandoned when in danger for the more easily defended motte. In Shackel's words, "The Motte represents the defensible but undesired propositions to which one retreats when hard pressed."

On The Motte, always attempt to remain inside your defensible territory, even if you are not being pressed.


New post guidelines

If you're posting something that isn't related to the culture war, we encourage you to post a thread for it. A submission statement is highly appreciated, but isn't necessary for text posts or links to largely-text posts such as blogs or news articles; if we're unsure of the value of your post, we might remove it until you add a submission statement. A submission statement is required for non-text sources (videos, podcasts, images).

Culture war posts go in the culture war thread; all links must either include a submission statement or significant commentary. Bare links without those will be removed.

If in doubt, please post it!


Rules


Recommended Posts And Communities

Recommended Realtime Chats