Uber shares take a dip after weak earnings…
Uber shares plunged by as much as 12% on Thursday after the company released its Q2 2019 earnings report. The rideshare company failed to meet Wall Street’s expectations for the quarter, and the report left a lot for investors to be concerned about.
The most worrying detail from the press release may be the company’s net losses, which reached an astounding $5.24 billion. These losses are largely due to stock-based compensation from the company’s IPO in May.
Meanwhile, Uber’s main competitor, Lyft, posted an impressive earnings report on Wednesday. Uber’s rival reported net losses of only $644.2 million.
Still, both companies face major concerns regarding their potential to reach profitability. But, with this latest earnings report, Uber may much farther away from hitting that milestone.
Uber Q2 Earnings Report
Here are the key points from Uber’s Q2 2019 earnings report:
- Revenue: $3.17 billion
- Loss Per Share: $4.72
- Gross Bookings: $15.77 billion
Regarding the press release, Uber CEO Dara Khosrowshahi stated, “Our platform strategy continues to deliver strong results, with Trips up 35% and Gross Bookings up 37% in constant currency, compared to the second quarter of last year.”
While this earnings report presented some worrying information, it wasn’t all bad. Uber also reported increases in Trips, Gross Bookings, and Monthly Active Platform Consumers. Growth in these areas demonstrates the increased demand for rideshare services in major cities around the world.
Despite growth in some key areas, Uber still has a lot of work to do to convince investors that it can become a profitable company.
Chasing Profitability
Questions regarding Uber’s potential for profitability are certainly not new, but these concerns have only grown stronger in 2019.
Earlier this year, Uber reported a $1 billion loss in Q1, announced the layoffs of 400 employees, lost its COO and CMO, and lost three members of its board of directors.
Though Uber has faced several challenges this year, it remains committed to moving towards profitability and competing with Lyft.
In a conversation with CNBC, Khosrowshahi said, “We think that 2019 will be our peak investment year and we think that 2020, 2021, you’ll see losses come down.” He continued, “No doubt in my mind that the business will eventually be a break even and profitable business.”
Though Uber’s main focus is still its ride-hailing service, the company continues to invest in a number of other on-demand services, including the Uber Eats food delivery service, bike-sharing, and shipping services.
With the growth of these services, along with the continued loyalty of Uber’s customers around the world, the company hopes to break even within the next few years.
