Guess How Much Money Uber Lost In The First Half of 2016?
Are things looking grim for the ride-sharing superpower?
Last Friday, the ride-sharing empire’s head of finance, Gautam Gupta told investors that Uber’s losses had mounted. According to a report by Bloomberg, Uber lost about $520 million before interest, depreciation, taxes and amortization in the first quarter for 2016. In the second quarter, the losses exceeded $750 million, along with a roughly $100 million shortfall in the U.S.. That’s right, Uber’s losses in the first half of this year total at least $1.27 billion.
According to Gupta, the majority of the company’s losses are due to subsidies for Uber’s driver’s.
To make matters worse, Uber and Lyft have been going head-to-head in an aggressive price war this year, which contributes to the company’s colossal loss. Despite the hardship, Uber told investors Friday that it’s willing to spend in order to maintain marketshare in the U.S. Uber delivered 62 million rides to Lyft’s 13.9 million in July of this year.
The ride-sharing giant has lost money with every quarter. In fact, the seven-year-old company has lost a minimum of $4 billion in the history of the company.
But, of course, profit loss is not uncommon within the building of large market empires. Professor of law and business at Stanford, Joe Grundfest, told Bloomberg, “It’s hardly rare for companies to lose large sums of money as they try to build significant markets and battle for market share. The interesting challenge is for them to turn the corner to become profitable, cash-flow-positive entities.”
For now, Uber appears to have many safety nets. They currently have about $8 billion in the bank and $1 billion in cash on the way from a deal with China’s ride-service, Didi. In exchange for Uber’s withdrawal from the Chinese market, Didi gave Uber a 17.5 percent stake in its business and a $1 billion investment. Uber also has access to a $2 billion credit line and a $1.2 billion loan.
Sure, $1.27 billion may seem like a lot to you and I, but it’s probably not enough to take down the Uber empire.