It may be one of the most ubiquitous companies around, but that doesn’t mean Uber is doing all that well. At least, not when it comes to making a profit. In fact, the transportation giant is doing the exact opposite of that, with Bloomberg reporting that Uber has already lost $1.27 billion in the first eight months of 2016 alone. Really, it’s nothing new for the company, which only recently said that it was turning a profit in the U.S.
A big part of the problem? Its drivers.
According to Uber’s head of finance, Gautam Gupta, who spoke to Uber investors on Friday, the ride-hailing service lost around $520 million in the first three months of the year and another $750 million in the second quarter, $100 million of which came from the U.S. Subsidies for Uber’s drivers were blamed for much of these shortfalls. Looks like Uber’s investments in self-driving technology can’t pay off fast enough.
“You won’t find too many technology companies that could lose this much money, this quickly,” Aswath Damodaran, a business professor at New York University, told Bloomberg. “For a private business to raise as much capital as Uber has been able to is unprecedented.” Losing that much capital is also pretty crazy — Amazon, for example, lost a whopping $1.4 billion in 2000, whereupon CEO Jeff Bezos fired 15 percent of his employees. Uber certainly hasn’t taken measures that drastic (yet), but the company has continued to take a larger share of its drivers’ fares.
The silver lining, however, is that Uber finally appears to be mitigating its previously gargantuan losses in China. Back in July, the Silicon Valley-based firm managed to make a deal with its biggest Chinese competitor, Didi Chuxing, obtaining 17.5 percent of the company’s business and a $1 billion investment. In return, Uber is pulling out of China. Given that the company lost $2 billion in its two years of attempted operations (and perhaps more), waving the white flag seems like a strategic move.
So sure, Uber may be the most valuable startup in history. But not all is necessarily well.
- Uber gives up on developing its own self-driving car
- The best bitcoin alternatives
- Uber sells its flying-taxi business to another flying-taxi business
- Elon Musk sails past Jeff Bezos to become world’s richest person
- The best documentaries on Amazon Prime right now