Uber says it can be profitable someday: all it needs to do is corner the “total addressable market” for all transportation and food delivery, which will give it $12t in annual revenue, which is 15% of all global transactions.
In the meantime, Uber continues to lead the global rideshare business, which does not have a single profitable company — but Uber loses more money than any of them!
The company booked $5.2b in losses in Q2 of 2019 — which suggests that they will shoot past their projected $8b in losses for the year (by comparison, Lyft only lost $644m in Q2/19). Uber says it’s OK because these are one-time losses related to paying giant bonuses to the execs who helped build such a fantastically money-hemorrhaging business.
In Q2, Uber booked $867m in revenue, which is a lot of money (72% more than the year before!) until you remember that it spent more than $6b to make that $867m.
Long before either Uber or Lyft can replace all transportation, public and private, with rideshares, they will have to contend with cities who are tired of having their streets, bike lanes and curbs crammed with inefficient, single-rider vehicles; and with nations, states and cities that are piercing the fiction that Uber and Lyft drivers are independent contractors and insisting that the companies extend waged employee protections and benefits to them.
Uber’s share price rose on the news of the loss.
Len Sherman, adjunct professor of business at Columbia University, seems to think so. He acknowledges that these companies, like any urban transportation service, can have a positive contributions to society, but will likely always struggle to make a profit. Drunk at 2AM? Pull out your phone and hail a ride home. By improving mobility options, Uber and Lyft can help make downtowns more vibrant, improve the flow of customers to retail stores, and drive up tax revenues for cities.The problem, Sherman says, is Uber and Lyft don’t get any runoff benefits. They can’t tax the bars and nightclubs that stay open until 2AM because they know Uber and Lyft will safely transport their passengers home. They can’t exploit the positive externalities of their business, but are held liable for the negative ones, like increasing traffic congestion or the creation of an underclass of freelancer drivers who are paid inadequately and lack safety nets.
Uber lost over $5 billion in one quarter, but don’t worry, it gets worse [Andrew J. Hawkins/The Verge]
(via Naked Capitalism)
