Those are really big round numbers.
Make $3 billion, and lose $1 billion, which means the company had to spend $4 billion.
What a business!
The ride-hailing company reported earnings for the first time as a public firm, and the results were inline, even if they were eye-watering. Investors weren’t awestruck with the results. Shares of the company were trading 10% below the IPO price before the earnings were released and barely budged when the numbers crossed the tape.
Chief Executive Dara Khosrowshahi has a tough task: convincing investors that Uber can turn a profit one day, given its reliance on rider incentives and competition in all parts of its business, from ride hailing to food delivery to freight.
While gross bookings – total ride values before driver costs and other expenses – were up 34% over last year, they were only up 3.4% over last quarter, showing decelerating growth.
In case your wondering if Uber will swing to a profit anytime soon, Uber Chief Financial Officer Nelson Chai gave a clue. In the earnings call, he said:
“We will not hesitate to invest to defend our market position globally.”
That’s corporate executive speak that means “we’ll spend other people’s cash to keep going as long as they’ll give us the money.” So far, investors appear willing to fund Uber’s spendthrift ways.
The company faces legal challenges around the world, disgruntled drivers internally, loses money on every ride of its core business, and probably can’t earn a profit without booting drivers for driverless vehicles that don’t yet exist. But other than that, it’s a fabulous investment.