Uber has lost at least $1.2 billion so far this year
Source: Mashable
The ride-hailing giant Uber Technologies Inc. is not a public company, but every three months, dozens of shareholders get on a conference call to hear the latest details on its business performance from its head of finance, Gautam Gupta.
In the first quarter of this year, Uber lost about $520 million before interest, taxes, depreciation and amortization, according to people familiar with the matter. In the second quarter the losses significantly exceeded $750 million, including a roughly $100 million shortfall in the U.S., those people said.
That means Uber's losses in the first half of 2016 totaled at least $1.27 billion.
Subsidies for Uber's drivers are responsible for the majority of the company's losses globally, Gupta told investors, according to people familiar with the matter.
Lyft, a much smaller company by trip volume, looks to be losing more money than Uber in the U.S. Lyft has told investors that it will keep its losses under $50 million a month, Bloomberg reported in April. That would be about $150 million in a quarter.
In July, Uber delivered 62 million rides to Lyft's 13.9 million.
"I think what Uber is trying to do is, 'Hey, look, we're going to take the losses up front in order to get to disproportionate scale,'" said Robert Siegel, lecturer in management at Stanford's business school. "The question is when they can get to profitability.
Read more: http://mashable.com/2016/08/25/uber-2016-loss/#p9wRUu.XtGqJ
LiberalFighter
(50,501 posts)left-of-center2012
(34,195 posts)Apparently they have money in the bank from shareholders, plus billions in credit.
The thinking is, take the losses now,
expecting global growth,
and future profits.
FrodosPet
(5,169 posts)To tide them over until they can let all their drivers go.
ToxMarz
(2,154 posts)They can't get driverless vehicles soon enough. They have to suffer the losses with paid drivers for now to lock up their position in the industry and keep potential competitors out until they can let them go.
LeftyMom
(49,212 posts)Driverless cars mean that the vehicle itself and ongoing expenses for fuel, wear and tear, etc are Uber's problem and not their drivers'. And they'll be 100% responsible for accidents whether there's a passenger in the car or not- currently drivers are on the hook between passengers, and most don't have the correct insurance to cover them.
They'll want a new sucker to take on most of their risks and expenses.
JI7
(89,174 posts)And cabs will outlast uber....
Red Knight
(704 posts)They don't pay for the vehicles. Where are the costs besides running their app and paying the drivers? Advertising? I don't see much of that. Legal costs? I'd bet a lot goes to that. Still, 1.27 billion for half the year is a LOT of costs.
Festivito
(13,452 posts)apnu
(8,722 posts)They have apps on several devices to develop and maintain, plus all the servers and databases and networking behind that to provide a near instant transaction speed. They probably have decent sized foot prints in data centers all over the world. That stuff isn't cheap.
Having said that, 1.27 billion in losses is excessive as hell.
Massacure
(7,498 posts)I imagine the terms of Uber's subsidy differs market to market, but I know that they do offer them. For example, they may guarantee a driver an average hourly rate of $12 an hour as long as they work 10 hours in the week and accept 90% of their requested rides. Assume that the sum of all the fares is $100 for those rides. Without subsidies Uber would take $20 and the driver would take home $80. But with the subsidies the driver takes home $120. Uber lost $40 on that driver for the week.
aggiesal
(8,864 posts)May not be enough!!!
http://mashable.com/2016/08/18/uber-class-action-california-oconnor-settlement/#APQzR2H6AmqP
ananda
(28,783 posts).. and then raise prices!
alcibiades_mystery
(36,437 posts)Why wouldn't I take a $7 Uber rather than a $19 cab ride?
Well, perhaps the cab ride actually costs $19 in gas, labor, and maintenance? Perhaps Uber's low cost and ready availability is a kind of illusion that leads to $1.2 billion losses and is pretty much unsustainable.
The reason Uber was so maniacal about reducing barriers to driver entry (and why Lyft has commercials on saying that drivers come first - above customers even!) is simple: both services are currently running as pyramid schemes, so they need an ever new supply of drivers to keep the cost super low and force the cab companies out of business. As soon as that happens, however, forget it. Price will skyrocket like a New Year's Eve peak ride from the Lower East Side to Massapequa.
left-of-center2012
(34,195 posts)That was in the news recently in a TV news report about Lyft's return to Albuquerque, NM
AngryAmish
(25,704 posts)Between Montrose and foster. Many parked cabs.
alcibiades_mystery
(36,437 posts)I'm aware.
( Watta you doing that far north?)
AngryAmish
(25,704 posts)Need my Mariano's.
alcibiades_mystery
(36,437 posts)yardwork
(61,417 posts)msongs
(67,193 posts)the goal of cornering the market and making a huge profit.
Response to msongs (Reply #10)
kestrel91316 This message was self-deleted by its author.
cbdo2007
(9,213 posts)NWCorona
(8,541 posts)JI7
(89,174 posts)mrmpa
(4,033 posts)for about 2 years. Once they dropped the rates to .90 a mile I quit. It meant when I used to work about 32-35 hours a week I would now have to work 60-70 hours a week to make the same money.
There was no way to appeal a low rating by a drunk who didn't know where they wanted to go and then rated me low for not reading their mind.
They're a scam for riders & drivers. There is no protection for drivers against abusive riders, nor for riders against abusive drivers. I was assaulted by a rider & Uber would not give the name of the rider to the Police when I wanted to file a complaint.
Deuce
(959 posts)jtuck004
(15,882 posts)Ask FDR, Lyndon Johnson, others. It's how we grow. It's damn near the only way we survive, because the world changes around us constantly. And since we have quit investing so much in ourselves, notice how much of the nation is losing in their personal assets every day, while debt grows?
The nation (you, me, Bobby Jo) used to invest in infrastructure, people and their education, the arts.
Heck, at one time they even created jobs because they know, deep down, that people want to do something.
Now everyone just sees it from the point of view of the The Nasty Man, who just wants to take, who screws people to get any advantage, and investment to him means getting other people to put money in his pocket.
That keeps his wealth intact while everyone else withers.
Uber delivered its first self-driving fleet to Pittsburgh this week. Their investors may or may not make money, Uber may or may not make it, but the world is changing, whether we like it or not.
Maybe one day we will begin to invest in ourselves again.
forest444
(5,902 posts)They've been affecting the livelihoods of taxi drivers around the world - and often times a taxi driver's income is the sole gainful source of income for his or her family.
MichMan
(11,788 posts)Both Amazon & Tesla had years of losses