BY PRITHVI BEHL | DKODING MEDIA
Uber IPO fell by 6% after Uber’s loss of $5.24 Billion. Compared to last years $878 Million, this is a significant increase.
What is responsible for this?
IPO related expenses have been a big chunk of these costs. The compensation in the form of “driver appreciation” also gave Uber a hard shake-up. The earning is up by 14% but the $3.2 Billion is still way below the expectations of the company as well.
Ride-hailing, the core of the company has grown by only 2%. The food delivery division, UberEats has grown by 72% to $595 Million. The cut-throat competition Uber is facing maybe a piece of bad news for investors but that is not all.
Uber’s Potential against the odds
While Uber’s IPO fell by 6% after the reports came out, the Chief Executive, Dara Khosrowshahi insists that the company’s aggressive investment will lead to diminishing losses by 2020 and 2021. Uber has seen growth in global users- from 93 million at the end of the first quarter against 99 million this quarter. But is this enough to take Uber from being the biggest bearer of losses to the king of the ride-hailing market?
Uber has seen growth in global users- from 93 million at the end of the first quarter against 99 million this quarter. But is this enough to take Uber from being a bearer of losses to the king of the ride-hailing market?
Is this a sign of a slowing economy?
The other ride-hailing company out of the USA has fared better than Uber. Lyft posted a loss of $644 Million during the quarter, but it’s nothing compared to the $5.3 Billion loss posted by Uber. These losses were expected, according to many analysts at Wall Street.
Uber suggests that this year is when they peak losses. Despite the loss posting, the stock is up by 2%. The biggest obstacle has been the cut-throat competition. The global economic slow down is among the other factors too.
The Trade wars that Trump administration has been taking up to keep other economies into a looming shadow of economic slow down is a factor that has affected not only Uber but companies the globe over.
The consequence of this has been a reduced purchasing power for workers the globe over. While the USA’s Dollar has a great hold over the markets, Yuan and Rupee are faring poorly.
Uber’s gift to our Environment
The most affected by congestion problems is the common man. Whether driving a personal car or hailing a ride from one of the many available companies, you are bound to be late. Let’s not forget that higher congestion is not congestion alone. A report made by Uber and Lyft tells of the various ways in which they are a big cause of congestion in the USA, the same can be said for most countries where the services are available.
It does not end here.
The obvious inference that anybody can make from the data is that Uber is not only posting Financial losses but the globe is facing a rise in pollution because of Uber’s high increase in taxis.
While companies like Uber and Lyft cannot exploit the positive externalities, they can be held responsible for the negative ones that they create. The Uber business strategy is that return on investment comes in after at least 10 years but have losses gone too far above water? No ride-hailing company is making a change for the better and none of them is profitable either. Ola in India, Didi in China or Grab in Southeast Asia, they all post losses. But with this peak of $5.3 BILLION, Uber is King Nothing.
But with this peak of $5.3 BILLION, Uber is King Nothing.