Uber shares fall on the back of growing losses
The heavily diversified firm reports quarterly losses and increased costs on new ventures
Uber shares fell 5.5 per cent yesterday after it posted its quarterly figures showing a $1.2bn (£930m, €1.07bn) loss, a drop of 20 per cent compared to the same period last year.
Uber's costs jumped 33 per cent to $4.92bn in the same period even though gross bookings across all its activities rose 29 per cent from a year earlier to $16.47bn. Yet despite these significantly higher costs, the firm is still expecting to reach profitability by the end of 2021.
Founded a decade ago, Uber, whose CEO is Dara Khosrowshahi (pictured above) is best known for its ride-hailing app, which now operates in more than 700 cities worldwide. But over the past few years the firm has seen some significant diversification and now includes freight, shared bicycles and scooters and food delivery business; Uber Eats.
It is also developing self-driving cars, offering banking services to its drivers and is looking at providing commercial passenger drone shuttles by 2023. Its aim is to become a major global logistics company.
However, Uber is facing regulatory challenges to its business model. One such challenge is a law that comes into force in California on January 1, which will turn most of the state's gig workers into full-time employees, a move that will impact Uber.
Shareholders are concerned that this, plus Uber’s ongoing drive to diversify, could impede a push to profitability.
Since Uber went public in May, the share price has fallen 30 per cent, yet Uber points to its total third-quarter revenues of $3.81 billion, which were up nearly 30 per cent year on year, beating estimates of $3.69 billion.
The share price is likely to come under further pressure tomorrow as the period where employees and early investors are prevented from selling their shares comes to a close.