The Bumpy Ride of Uber
Rail-hailing company reports losses since IPO
With the first two quarterly reports of 2019 detailing massive losses, those who invested in Uber since the ride-hailing service became a publicly traded company this year have likely experienced a bumpier ride than initially anticipated.
However, the company, as well as some names in the investment world, remain steadfast in the opinion that Uber will soon enough hit smoother pavement and ride into the sunset with the top down and music blaring.
The first-quarter report from Uber, released the same month the company went public, indicated a net loss of roughly $1 billion, yet shares for the company still rose 2.6% following a conference call with Uber CEO Dara Khosrowshahi, who cited business improvements and 2019 being an investment year for the report’s findings.
In a conference call Aug. 8, second-quarter results from Uber indicated a massive $5.2 billion loss, much of which was attributed to stock compensation from its initial public offering. Still, the news rattled Wall Street, where Uber’s stock plunged 9% at the start of the following day’s trading and closed down 6.8%.
“Our platform strategy continues to deliver strong results, with trips up 35% and gross bookings up 37% in constant currency, compared to the second quarter of last year,” Khosrowshahi said in a statement released after the Aug. 8 conference call. “In July, the Uber platform reached over 100 million monthly active platform consumers for the first time, as we become a more and more integral part of everyday life in cities around the world.”
In an interview on CNBC, Khosrowshahi called the Q2 report a once-in-a-lifetime hit and that Uber is steering toward revenue growth on the back nine of 2019, with the tide of losses anticipated to subside in 2020 and 2021.
While some investors maintain a bullish approach to Uber stock because of a robust long-term outlook, other are becoming more wary of sinking too much hope into the organization. In an article in Forbes, professional investor Stephen McBride, editor of RiskHedge Report, warned that market speculators might want to steer clear of Uber in 2019.
Noting that Uber is already among America’s 100 largest companies, McBride wrote, “Uber’s IPO is no ground-floor opportunity. Uber is a giant, overvalued, money-losing enterprise that early investors have already milked dry.”
Uber is certainly present in the Greater Lansing region, but Maria Fernanda Resendiz, a member of the communications team for Uber, said the company doesn’t share regional or state-level data. However, she noted there were 3.9 million active Uber drivers globally in 2018. On average, around half of all drivers in the United States drive fewer than 10 hours a week, and Uber drivers have earned over $78.2 billion on the platform since 2016 as well as $1.2 billion in tips since in-app tipping was introduced in 2017.
“Our aim is to become a one-stop shop for all your transportation and delivery needs, so that your phone can replace your personal car,” Resendiz said. “Having a greater variety of transportation modes at your fingertips makes it increasingly easy to live life without a car. Plus, it opens up spaces in which Uber and public transit agencies can work together so that it’s not just cheaper to take the train or the bike or the shared trip instead of taking your own car – it’s far more convenient as well.”
Despite this year’s reported losses, the Uber brand remains one of the most widely recognized in the world. Whether that will eventually translate into it being a sound investment remains to be seen.