Uber loses half a billion dollars in 3 months
Uber spent huge sums to lure drivers back in the second quarter, sending it a larger-than-expected loss and raising new doubts about the long-term reliability of its business model. The company's stock fell about 4% in extended trading.
Uber said in a statement on Wednesday that its loss before interest, taxes and other expenses amounted to $509 million in the period ending in June. Uber's second-quarter loss increases on a quarterly basis, but is lower compared to the same period last year.
Analysts had expected Uber to incur a loss of $325 million, according to the average analyst estimate compiled by Bloomberg.
Uber expects losses in the third quarter to shrink to less than $100 million, with total bookings between $22 and $24 billion. This is in line with analyst estimates. Meanwhile, Uber has warned that a large-scale outbreak of the delta mutant strain of the Corona virus could change the results.
SoftBank is selling part of its stake in Uber for $2.1 billion
"We've invested in recovery by investing in drivers, and we've made solid progress," Uber CEO Dara Khosrowshahi said in a statement.
Expectations for Uber already dented on Wednesday after Lyft Inc., the second-largest US ride-hailing company, reported a weak outlook for the third quarter. Both stocks fell during trading.
Still, Lyft has proven its business can be profitable, at least when it ignores stock compensation and other costs. Lyft reported its first adjusted earnings in the second quarter. Uber said it will post adjusted quarterly earnings by the end of 2021.
Acquisitions in the time of the epidemic
Uber is using the pandemic as an opportunity to expand beyond passenger services. The San Francisco-based company placed a big bet on shipping with its $2.25 billion acquisition of Transplace last month. Uber has also moved into grocery and alcohol delivery through acquisitions, added package delivery, and partnered with GoPuff to transport convenience store items.
"What we're looking at is continued expansion beyond food delivery," said Ron Josie, analyst at JMP Securities. "A battlefield that's evolving is having anything delivered in an hour or two."
food delivery
Uber has been providing meal-delivery from restaurants to customers since 2014, but the pandemic has significantly accelerated growth. The total bookings for delivery orders doubled in the second quarter compared to the same period last year, to $12.9 billion. However, growth was muted compared to the first quarter.
"Long-term growth is likely to be gone," Mandeep Singh, an analyst at Bloomberg Intelligence wrote in July.
Second-quarter sales doubled year-on-year, to $3.93 billion, topping analysts' estimates. The number of Uber users reached 101 million in the second quarter, in line with estimates.
"financial" investments
Uber reported its first net profit as a public company in the second quarter. The company's income was $1.1 billion, driven in large part by its stake in Didi Global, China's largest ride-sharing company, which went public in June.
Since then, Didi shares have fallen 30% after Beijing launched an investigation into the company and removed Didi from Chinese app stores.
Khosrowshahi said Uber would consider selling its stake in Didi or other investments, which are valued at about $15 billion and also include Southeast Asia's Grab Holdings and Joby Aviation. He specifically referred to Didi as a financial interest rather than a strategy.
"We do not intend to run an investment company, but we have enough liquidity to ensure that we have the flexibility to maintain those positions," Khosrowshahi said in a conference call with analysts on Wednesday.
There are still challenges in the field of passenger transport services. Many drivers quit early in the pandemic when demand evaporated, and due to concerns for their health. In recent months, vaccinations have brought passengers back, but the return of drivers has not kept pace. Uber said in April it would spend $250 million to get more drivers into the business by distributing bonuses and other incentives.
Currently, the outbreak of the delta mutant strain presents a new and unpredictable problem for the passenger transport business.
