The second-quarter results for Uber which were declared on Thursday, showed net losses amounting at $5.24 billion. The share prices of the ride providing company dropped by as much as 12 percent after this, before settling down to around 4 percent.
The loss per share was at a figure of $4.72 in contrast to the analysts’ predictions of $3.12. The net revenue stood at $2.87 billion while the expected values were $3.05 billion. Uber CEO Dara Khosrowshahi said in a subsequent statement that “We think that 2019 will be our peak investment year and we think that 2020, 2021, you’ll see losses come down. I think our break even is something that we can push the company to break even if we really wanted to frankly.”
In the past years, Uber has been investing in various business arenas including food delivery, bike-sharing and a freight service. The core ride-hailing business generated a figure of $12.19 billion in gross bookings whereas the Uber Eats business generated $3.39 billion. Analysts expected $3.51 billion in gross bookings from the Uber Eats business.
In a discussion with CNBC, Khosrowshahi has said that “The Eats business is still a business that carries very significant growth going forward and that continues to attract a lot of capital. Not just in the US, but all over the world.”
The company had served 30 million riders in 2018 with around 100 million monthly active consumers at present. But it had to deal with increased driver compensations in New York City following a new legislation. Even though it offered various membership offerings and loyalty rewards to keep the riders and drivers loyal to its service, the ride-hailing business of Uber has shown only 2 percent growth from $2.29 billion to $2.35 billion.
Uber is also facing tough competition from brands like Lyft in North America, and Grab and Didi in Asia. Lyft, Uber’s biggest rival, reported its Q2 2019 earnings on Wednesday with losses of $0.68 per share on $867.3 million in terms of revenue. The loss figures were much lower than the expected values. Rather than focussing on a battle for low consumer prices both companies are paying attention on diversifying their services across the platform.
In the past few weeks, Uber has also laid off 400 employees from its marketing team in order to create a more centralized structure. As the dust of the results settle Khosrowshahi has to work hard to bring back the faith of investors in Uber’s business strategy.