Uber loses billions, falls short of revenue targets
The US ride-hailing giant saw disappointing returns in its second quarter report. Uber has not yet reached profitability, as it continues to subsidize prices to acquire riders and rely on spending to expand services.
Uber reported a $5.2 billion (€4.6 billion) loss on Thursday that sent its shares tumbling on Wall Street. The San Francisco-based firm also reported that its revenues had fallen short of expectations.
The US ride-hailing company said most of the multibillion dollar loss was attributed to stock-related compensation expenses.
However, its food delivery unit Uber Eats saw its revenue rise, as the firm’s core ride-hailing business has slowed.
“We think that 2019 will be our peak investment year and we think that 2020, 2021, you’ll see losses come down,” CEO Dara Khosrowshahi told US media.
Thursday’s earnings report came just weeks after Uber confirmed it would cut 400 jobs from its marketing team of more than 1,200 workers, in order to reduce costs and improve efficiency.
The ride-sharing company has not yet posted any profits, as it continues to rely on spending and subsidized prices to attract drivers and expand its services.
“While we will continue to invest aggressively in growth, we also want it to be healthy growth, and this quarter we made good progress in that direction,” CFO Nelson Chai said in a statement.
Uber’s setbacks came as a price war with its smaller competitor Lyft, which saw its revenue expectations rise just the day before, apparently began to ease.
Both companies went public early this year. The two have been jockeying for riders across the US, with Lyft also engaging in subsidization and greater spending.
But it is Uber that leads the market in active riders and has a wider presence globally. Uber said its monthly active users rose to 99 million globally, from 93 million at the end of the first quarter and 76 million a year earlier.
The ride-hailing giant has revolutionized transportation in the US with its innovative mobile phone hailing service, but it has received substantial criticism for its unfair advantage in relation to taxis, which require far more regulations to operate than Uber drivers do.
Uber has struggled to enter European markets, as taxi companies have fervently opposed them and successfully lobbied their governments to either ban it or strictly control its operations.
In Germany, the company has been banned for years. But Angela Merkel’s government is reportedly considering the possibility of opening the market to services like Uber by 2021.