Uber Continues to Lose Money During First Half of 2016
Uber Continues to Lose Money During First Half of 2016

Uber Continues to Lose Money During First Half of 2016

The ride-hailing company has already lost $1.27 billion in the first six months this year

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Uber started off strong and became a leader in the ride-hailing industry, but lately it has lost billions worldwide. 2016 was no different for the now $62.5 billion company. Uber has reportedly lost $1.27 billion during the first half this year, according to a report by Bloomberg.

Uber is not a public company yet and so its financials are not reported publicly. Shareholders, however, are briefed on the financial performance of the company at the end of every quarter. It lost about $520 million in the first quarter and around $750 million in the second quarter.

Ride bookings increased at a quick rate during the first half, giving some hope to the company in the midst of rising losses. Bookings during the first quarter totaled $3.8 billion and increased to $5 billion in the second quarter. Similarly, revenue for Uber during the first quarter clocked in at $960 million and increased to $1.1 billion in the second quarter.

The spike in revenue was a result of the change in the company's calculation of UberPool’s contribution. It lost about $2 billion in 2015 after interest, taxes, depreciation and amortization and has lost around $4 billion during its seven-year history.

Good news for Uber is that from third quarter onward it won’t have to bear losses in China. It lost around $1 billion in the country due to intense competition from Didi Chuxing. Uber was recently acquired by Didi Chuxing though.

It was a battle both had been fighting against each other in China. Both were unable to report profits and had to invest billions just to keep operations going. Major losses mainly incurred from cutting down fares to remain competitive against each other.

US was a profitable region for Uber but posted losses in the second quarter, of about $100 million mainly due to a pricing war with local rival, Lyft. Despite losing money, Uber says it will continue to invest and attract more riders to expand its market share in US.

Lyft itself has been losing money in US – as per the company it is working to keep losses below $50 million a month – which equals about $150 million per quarter. This is more than what Uber lost in the second quarter. Unlike Lyft, Uber has a better ride completion rate. Uber completed 62 million rides in July against 13.9 million by Lyft.

Uber giving subsidies to its drivers is considered to be a major factor contributor to losses. It has been looking to introduce self-driving cars in the future so it does not have to pay its drivers. It recently acquired self-driving startup Otto for $600 million and will start testing self-driving taxis in Pittsburgh this month.

Uber has somehow managed to retain investor trust despite losing money. Over the last three months, the company raised $1.15 billion in debt financing and another $3.5 billion from Saudi Arabia’s Public Investment Fund.

The company still has capital to make further investments to expand in other regions, with about $8 billion in the bank and another $1 billion it is due to receive from Didi Chuxing. It even has a credit line of $2 billion despite taking a $1.2 billion loan last month. With so much money in the bank we might see expansion from the company as it is currently present in 473 cities.

Editing by Fouad Ahmed; Graphics by Omair Raza

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