Uber Technologies Inc. has seen a rapid increase in bookings in the first half of 2016, but a $1.27 billion loss in that same time period. The first quarter of 2016 posted a $520 million loss, while second quarter losses exceeded $750 million, with approximately $100 million of the shortfall occurring in the United States. Although Uber Technologies Inc. is not yet a publicly traded company, shareholders had a reason to tune in to last quarter’s business meeting. Uber’s head of finance Gautam Gupta explained to investors the variety of reasons the company was losing money globally. The major factor, Gupta cited was the magnitude of subsidies for Uber’s drivers.
However, the company continues to grow in terms of service demand and popularity. Bookings increased rapidly from the first quarter of the year to the second, from $3.8 billion to over $5 billion.
In its seven-year history, Uber has lost a total of $4 billion, unlike any other enterprise. The company has experienced a rapid rate of global expansion and its share of legal battles. In July, Uber made a business deal with Didi Chuxing, its largest global competitor located in China. The deal cuts Uber’s losses with a 17.5% stake and a $1 billion investment in exchange for Uber’s exit from the Chinese ride-hailing market. The move could certainly help shore up Uber’s losses beginning in September.
What Uber lacks in profitability it makes up for in backing and investment. Venture capital firms Goldman Sachs and Benchmark Capital have helped Uber make over $16 billion. Uber’s latest valuation is $69 billion.
Uber’s legal troubles continue with Lyft Inc, and that isn’t helping profitability either. The company doesn’t plan on backing down any time soon and is willing to continue the fight to maintain its market share of 84 percent in the U.S. Although Lyft appears to be losing more money than Uber in the United States. Uber’s monthly ride volume is approximately 62 million, compared to Lyft’s 14 million.
Time will tell how Uber advances as a company and when it becomes sustainably profitable. But with its market share firmly in hand in the United States and its increasing demand for services, there’s a bright future ahead.