More losses for Uber after spending on discounts, new ventures

Andrew Cummings
November 5, 2019

Total revenue rose almost 30 per cent to $3.81 billion United States, beating analysts' average estimate of $3.69 billion, according to IBES data from Refinitiv.

"At least over the next couple of quarters we still see a lot of money flowing into (Eats)", Uber Chief Financial Officer Nelson Chai said during a Monday analyst call.

Uber said revenue was up 30 per cent compared with that from the same quarter past year, and the company closed out the quarter with more cash than the prior one, following asset sales and investments. That's the third largest loss for Uber since the company started reported earnings in 2017 according to The Wall Street Journal. The company also revised its financial outlook to predict higher-than-expected growth, ushering in investor confidence - though Uber remains the dominant player in the ride-hailing space. As of writing, the stock is down 8.77 percent to $28.36 after closing at $31.08 yesterday afternoon.

But Lyft is only present in the USA and its scope is only about people, whereas Uber gets much more competitors due to its Uber Eats segment like GrubHub Inc (NYSE: GRUB) whose stock just got crushed due to weaker than expected Q3 results, poor forecasts with customers becoming less loyal to a single platform.

"Uber would be EBITDA positive if it wasn't also investing in Uber Eats, the freight operation and autonomous driving capabilities", said Atlantic Equities analyst James Cordwell.

Uber Technologies Inc on Monday posted a wider third-quarter loss as costs soared at the ride-hailing company, sending shares down 4.4 per cent in after-hours trading. Uber convinced more consumers to use its range of services as its number of monthly active consumers grew 26% from the same time previous year, reaching over 103 million.

Uber, known for its ride-hailing app available in more than 700 cities worldwide, has vastly diversified its business over the past years. Some analysts expect more than 80 per cent of the company's outstanding shares will become eligible for sale.

With Uber under pressure, investors are keen to see the company expanding market share.

After debuting in May at $45 for the initial public offering - translating to a market value of $82 billion - Uber shares went into reverse.

Revenue from Uber's ride-hailing business rose about 19% to $2.90 billion while sales from its Uber Eats segment rose 64%. But they fell short of analysts' estimates of 105.5 million, according to IBES data from Refinitiv.

The losses at Uber are mounting, but the ride-hailing heavyweight now predicts it will be profitable in about two years.

Lyft executives on Wednesday, in an apparent dig at Uber's sprawling business ventures, emphasized they remained squarely focused on mobility.

In doing so, Uber, like other "gig economy" businesses, is largely relying on freelance contractors. California legislation created to push Uber, Lyft, DoorDash Inc. and other gig-economy to reclassify independent contractors as employees goes into effect in January and could increase costs in the state by as much as 30 per cent, according to analyst estimates.

Khosrowshahi said on the call that Uber would exit markets and dispose of assets where it was clear it could not command No. 1 or No. 2 positions within the next 18 months.

Other reports by iNewsToday