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Uber is building up losses to mitigate driver shortages

Uber Technologies spent a lot of money to seduce drivers in the second quarter. The result was greater losses than expected, raising questions about the reliability of long-term work models. In after-hours trading on Wall Street, stock prices fell 8%.

Uber said in a statement Wednesday that it had lost $ 509 million ($ 689 million) before interest, taxes and other costs were deducted for the period ending June. This is wider than last quarter, but narrower than it was a year ago. Analysts expected a loss of $ 325 million, according to an average estimate compiled by Bloomberg.

Many Uber drivers quit early in the pandemic when demand evaporates and their health concerns grow.credit:AP

According to Uber, third-quarter operating losses were less than $ 100 million and total bookings ranged from $ 22 billion to $ 24 billion. The forecast is in close agreement with the analyst’s estimate. Uber warned that a wider outbreak of delta variants of the coronavirus could alter outcomes.

“By investing in drivers, we have invested in recovery and made great strides,” Uber CEO Dara Khosrowshahi said in a statement.

Expectations for Uber were already eased Wednesday after rival Lyft, the second-largest ride-hailing service company in the United States, reported weak forecasts for the third quarter. Both stocks declined during trading. However, Lyft has proven that the business can be profitable, at least if it overlooks equity-based compensation and other costs. Lyft made its first adjusted profit in the second quarter. Uber said it would generate quarterly adjusted profits by the end of the year.

Uber has used the pandemic as an opportunity to extend beyond vehicles. The San Francisco-based company made a big bet on cargo with the $ 2.25 billion purchase of Transplace last month. We also moved to grocery and alcohol deliveries through the acquisition, added package deliveries, and partnered with GoPuff to carry convenience store merchandise by ferry.

Ron Josie, an analyst at JMP Securities, said: “The battlefield under development is to deliver anything within an hour or two.”

Uber has been serving food from restaurants since 2014, but the pandemic has dramatically accelerated growth. Total bookings for delivery orders in the second quarter nearly doubled from the year-ago quarter to $ 12.9 billion. Growth slowed compared to the first quarter. “It’s likely that super-growth is over,” Bloomberg Intelligence analyst Mandeep Singh said in July.

Second-quarter sales doubled year-on-year to $ 3.93 billion, surpassing analysts’ expectations. As expected, the number of people using the Uber service was 101 million in the second quarter.

Uber is building up losses to mitigate driver shortages

Source link Uber is building up losses to mitigate driver shortages

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