Losses Rise, Shares Fall: Uber Loses $5 Billion
Investors are being actively persuaded that everything will be fine.
Revenue of ride-hailing company Uber Technologies Inc failed to meet Wall Street targets as growth in its core business slowed. Its losses hit a record $5.2 billion. This is reported by Reuters.
This caused shares to fall by as much as 6%. Uber said the price war in the US is gradually ending, but the slowdown in revenue growth raised questions about its ability to expand and withstand competition.
“Losses are growing and competition is fierce,” said Haris Anwar, senior analyst at financial markets platform Investing.com. “What is undermining investor confidence and hit the shares hard after the report is the lack of a clear path to increasing revenue and cutting costs.”
Uber’s net loss in the second quarter of the year, up from $878 million a year earlier, also included $3.9 billion in stock compensation expenses linked to the IPO and nearly $300 million in a “step-up” related to the sale of those same shares.
Uber’s revenues and expenses:
Uber reported that its revenue growth slowed markedly to 14% ($3.2 billion). This figure did not match the analysts’ average estimate of $3.36 billion, according to IBES data from Refinitiv.
The company’s core business, car-based passenger transport, increased revenue by just 2% (about $2.3 billion). Food delivery, Uber Eats, grew 72% ($595 million). Gross bookings, measured as the total value of trips by car, scooters and bicycles, food delivery and other services, plus payments to drivers, restaurants and other expenses, rose 31% year on year. They totaled $15.76 billion, although analysts on average expected $15.80 billion.
At the same time, Uber is receiving less money from car rides. The number of passengers rose 20%, while profit after payments to drivers increased by just 4%. Chief Executive Dara Khosrowshahi told a press conference that the competitive environment had begun to “progressively improve.” According to him, 2019 will be the peak year for investment, and losses will decline in the following two years, 2020 and 2021.
Uber’s expenses rose 147% ($8.65 billion per quarter), including a sharp increase in research and development spending.
Nelson Chai
Chief Financial Officer“Although we will continue to invest actively in growth, we also want it to be healthy growth, and we want to achieve good results this quarter.”
The company’s loss, including interest, taxes and compensation, doubled to $656 million. However, this figure was reportedly better than Uber had expected.
Total bookings for the year are expected to be between $65 billion and $67 billion, in line with the Wall Street target of $65.9 billion.
The company has not yet said whether it will make a profit, but it is actively trying to convince investors that growth will come from all of its possible services.
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