Last Updated on 2017-05-21 , 1:41 pm
Mention Uber and most will tell you about their $5 Uber Pool promotion. With Uber giving $5 rides and free rides to referrals like crazy, you’d have thought that the company has more than enough money to burn, right?
Wrong, because Uber has been losing money.
Or to be more exact, a lot of money.
A Whooping $1.27b Loss!
After boasting its profitability early in the year, Uber ironically reported a loss of $520 million before interest, taxes, depreciation, and amortisation for the first quarter. According to Bloomberg, losses for the second quarter significantly surpass $750 million, including an approximate $100 million shortfall in the States.
In short, Uber’s total loss for the early half of 2016 is at least $1.27 billion.
Here’s Why
The reasons for such astronomical losses are, according to Newshub, that Uber is still in the growth phase and is spending big with the objective of monopolising the market. Moreover, it had invested heavily in Chinese and Indian markets, and spent $930 million on self-driving cars.
Experts predicted losses will persist until Uber’s competitor, Lyft, is out of business but questioned the strategy’s sustainability. Driver subsidies account for majority of the stated losses, said Bloomberg documents leaked by
The Information showed Uber paid out $2.72 billion to drivers in the first half of 2015. In comparison, Uber loss $72 million to promotions and discounts in 2016. Uber has been in the red quarter after quarter. It reported a loss of $2 billion and at least $4 billion in its entire history of seven years.
The State of Uber
According to CNN, early this year, Uber sold its operations to its Chinese rival, Didi Chuxing, after making annual losses of $1 billion in China.
Uber received an 18% share from the deal, making it the largest shareholder as well as raising $16 billion. The company was previously valued at $68 billion, said CB Insights.
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Featured image: businessofapps.com
This article was first published on goodyfeed.com
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