|UBER LOSES $1.2 BILLION BY Q2 2016|
Aruba, August 30, 2016 - Uber Loses $1.2 Billion by Q2 2016; Is This the End of the Sharing Economy or a New Era of Loss-Leading Pioneers?
Bloomberg’s Eric Newcomer reported that on a recently Uber quarterly call with shareholders, the company’s head of finance, Guatam Gupta announced that Uber’s losses continue to escalate. Total losses in the first half of 2016 totaled an astounding $1.2 billion. According to Bloomberg’s sources, there are several reasons for this. For one, subsidies for Uber's drivers are responsible for the majority of the company's losses globally. On top of that, Uber has been investing billions of dollars in China and it’s yet to turn a profit there. And of course, there’s staving off competition. Most notable, Uber has been engaged in a heavy price war with Lyft throughout the year to expand its market share as well as gain ground over other competitors in each market around the world. Uber told investors that it's willing to spend aggressively to do so.
Of course all of this lead the press and the interwebz to cry that the “sharing economy bubble is bursting” and that Uber and its astronomical valuation of $69 billion are examples of runaway capitalism, a "shell game," and/or a company trying to take on too much all at once with finite resources. Yet, existing resources aren’t enough it seems to take over the world in addition to its other significant investments in autonomous vehicles, in which Uber CEO Travis Kalanick said he "can't be wrong" about, as well as logistics and delivery services and more. Add to this, a growing portfolio of settled and impending lawsuits. The company will eventually have to raise again or finally take the company public to continue its crusade.
A key question to consider is whether or not Uber, regardless of its current impact on the transportation industry, is ever going to turn a profit. This question is leading experts to speculate whether or not its business model is actually lucrative in the long term to all stakeholders including investors, service providers (drivers), and Uber itself along with the “Uber of” every other industry.