12 years after its inception, Uber says it could finally make a profit
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A business that makes money? What an original idea. Perpetual money loser Uber announced on Tuesday that it has moved closer to the alien concept.
The carpooling giant said so could turn his first profit on an adjusted basis in the current quarter, in what would mark the end of a losing streak worthy of the New York Jets.
The biggest loser
Uber has spent billions over the years growing its business, then turning around and hemorrhaging cash. By the time the pandemic broke out, investors had increased pressure on executives to run a business that actually makes money. Covid, which essentially froze the ridesharing economy for months, only forced the problem.
After Uber lost $ 8.5 billion in 2019, the company cut its losses by 20% last year to $ 6.8 billion. It has achieved this by shrinking considerably: 6,700 employees have been laid off, 45 offices closed, non-core businesses like its autonomous driving division have been sold, customer discounts have been removed. And the new, slimmer Uber looks better on paper, according to new documents:
- Uber said on Tuesday that its adjusted profit would be between a loss of $ 25 million and $ 25 million at the end of the current quarter on September 30. He previously expected to lose less than $ 100 million.
- Uber stock had lost 22% of its value in 2021, but news of a potential profit rallied investors, and the stock rose 7.8% in morning trading on Tuesday.
Covid made Uber Eats, the company’s delivery service, more lucrative than its core ridesharing business: delivery generated $ 2 billion in revenue in the second quarter, rides brought in $ 1.6 billion. But it is narrowing: the 1.5 billion trips booked in the last quarter represent a 105% improvement over the previous year.
Upcoming challenges: Even if Uber makes a profit, it will face challenges to keep its head above water. The labor shortage in the United States means that it still does not have enough drivers and several American cities have launched legal challenges over the cuts they are undergoing at restaurants, threatening very slim margins. It’s like they say, “More money, more problems.”
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