Earlier this week Uber reported their earnings for the quarter ending in June and it numbers don't look nearly as good as they should. When you consider that the ridesharing giant has been bleeding a whopping $5.2 billion in a single quarter, you have to wonder if the days of cheap rides might soon come to an end.
The company went public in May valued at $82 billion which was impressive and yet short of upper end estimates. Their strategy already had investors concerned about sluggish sales and less than stellar revenues, but this quarter has been the most expensive one for the company since it began disclosing financial data in 2017.
On a more positive note, $3.9 billion can be chalked down to the stock-based compensation that Uber employees received after the IPO, which is why some Wall Street investors won't lose sleep over it, if you believe Bloomberg. However, that still leaves a significant $1.3 billion operating loss even as trips rose 35 percent compared to last year and revenue grew 14 percent.
Rival Lyft is in a similar position, but unlike Uber it reported higher than expected revenues of $867 million, which is 72 percent more than a year ago. Uber has UberEats to thank for improving the bottom line with new customers that were gained through the Rewards program and partnerships with companies like Starbucks.
To put things in perspective, Uber aspires to offer all forms of transportation and is investing heavily in self-driving cars, expanding its bicycle and scooter business, building a freight delivery platform, and even helicopter rides. The company also laid off a third of its global marketing staff and saw three board members step down since the IPO, presumably to move faster as an organization.
That said, Uber still has several problems on its hands, the most important of which are the drivers, who aren't full-time employees with all the added benefits that come with that business model. Regulators in New York have set a minimum wage for ride-hailing drivers, which has set a precedent that could lead to more states taking similar action in the future.
Also worth noting is that Uber's dream of ushering a new era of transportation has led to incidents where its drivers can unknowingly end up helping an armed robber escape the scene of a crime. And if that isn't enough, some countries like Australia aren't making it easy to operate on their territories.