Why Uber Is Losing Money

Why Uber Is Losing Money


Uber is going public at a
valuation of over $75 billion. The world’s biggest ride-hailing
business is hitting the market just weeks after
smaller rival Lyft. When you think about the
excitement surrounding Lyft, multiply that for Uber. This is more global. It’s diversified. So there’s certainly a lot
of excitement from public market investors. Uber is far from making money. It reported an operating loss of
$3 billion in 2018 after losing more than $4
billion the prior year. During its roadshow, Uber compared
itself to Amazon as it explained its money-losing
business to investors. Why Amazon? Because the now wildly successful
company didn’t make a profit for several years after it
went public in 1997. But Uber is n’t Amazon. For one, Amazon had little
competition in the e-commerce space when it IPO ‘d. It also had a valuation of
$438 million compared to Uber’s $75 billion. Still, some investors are
far from being scared away from Uber’s red ink. In the U.S. alone, Americans spend
about $1.2 trillion on personal transportation and
Uber really is at the forefront of this move from a
personal car ownership model to more of transportation
as a service. And I think investors really do
believe that humans will one day forgo owning their physical cars
in favor of an on-demand service like Uber or Lyft. Uber was founded as UberCab in
2009 by Garrick Camp and Travis Kalanick. The app launched in San
Francisco in July 2010. It allowed users to hail, via an
app, black town cars but was still more expensive than
taking a taxi. It then dropped cab from its
name and launched in New York City and Paris. But in 2012, another ride-hailing
company entered the market. You had Lyft come into the
picture and they came around and said you know we’re going to
give Uber some competition on the lower priced end of things. And from that came UberX, which is
now sort of Uber as we know it, the cheap alternative
to hailing a taxi. Uber now operates in 63 countries,
700 cities and has completed over five billion rides. There are also more than
three million Uber drivers worldwide. Taxis accounted for 99 % of
ride-sharing trips in the U.S. in 2012. And now, with the rise of
Lyft and Uber, taxis represent just 12.5%. So why is Uber
losing so much money? First, they have
to pay drivers. And now drivers are
asking for more. Drivers united, will
never be defeated. Increased competition with Lyft
has created tensions with drivers who complain of low
pay rates and unfair compensation. It’s expensive to navigate the
regulatory environment in each city and to
ensure the business. Insurance costs for Uber
ride-sharing products increased $1.3 billion from 2016 to 2017. Credit card processing fees and
driver incentives also drain the company of money. On the rider side, they also
have to make it appealing. Entice the rider to come to
Uber and use its platform instead of going to Lyft. So in this way, Uber and
Lyft both spend millions and millions of dollars to attract and
keep people on their platforms. Uber’s growth to number one
has been riddled with controversy. In 2017, after multiple scandals,
Uber founder Travis Kalanick stepped down. Uber CEO Travis Kalanick is
out, after shareholders staged a revolt. Meanwhile, Lyft gained a reputation
for being the friendlier of the two. Uber has certainly had a
more troubled history than Lyft. Lyft has had a better
reputation with drivers for instance they introduced tipping from the
very beginning, Uber only introduced tipping a
few years ago. At IPO, Lyft was valued at just
over $20 billion but its stock has had a rocky start. The Lyft IPO has been a
bit challenging and the revenue multiple that people are using to
value Lyft, people are well sort of look to apply that to Uber
as as a way to get a sense for valuation. Also, some of the trends that
were outlined in Uber’s S-1 filing can raise
some questions. Specifically, the fact that you’ve
seen a pretty sharp slowdown in revenue growth at Uber
over the last few quarters and significant declines in
its take rate. Uber’s total revenue for
2018 was $11.3 billion with ride-sharing bringing
in over 80%. Uber Eats is the second biggest
source of revenue for the company at $1.4 billion. But Uber has put a lot
of focus on diversifying into bike sharing, scooters, Uber Freight, air
taxis and even its own autonomous driving technology. All of which require a lot
of investment and has slowed growth towards profitability. If you believe that this industry
and Uber and Lyft are going to be profitable, you believe that
at some point in the future self-driving cars are going to
help them get there. Uber’s Advanced Technologies Group, or
ATG, which works on self-driving vehicles, recently announced
a $1 billion investment from SoftBank,
Denso and Toyota. A sign investors may see
it’s serious about long-term growth. ATG took a hiatus after one
of Uber self-driving cars killed a woman in Arizona last year. Uber’s rapid growth in many directions
has meant a lot of spending. However, some analysts
predict Uber will become profitable eventually. In terms of when Uber
could achieve profitability, we’re still several several years away. I’d say four or five
years away at least. Uber is part of a big
wave of Silicon Valley companies rumored to go public in 2019. So will it be
a smart investment? Uber really is the number one
player in virtually all of the markets where it operates a
ride-sharing business and an online food delivery business. And over time that number one
kind of leadership position in those respective markets should
translate into a more resilient business, a
more profitable business. I think the important thing for
investors to know is that this is a bet on a company that
aims to be the so-called Amazon of transportation. They have
humungous aspirations. They don’t wanna focus
on just the U.S. market. They want to be global. They want to be diversified. They’re looking at a $5.7 trillion addressable market. So when you look at Uber,
you’re really betting on the future of transportation not
just ride sharing.

100 Comments

  1. Dominus Devacore says:

    Diversity and Uber work well together… it's enriching.

  2. Nolan Abell says:

    Tesla’s robotaxi network will challenge UBER big time

  3. Chikoo Chikoo says:

    Uber ship must sink at all.

  4. Flubadubdub The Great says:

    Watching this as I wait for an Uber eats

  5. Sree Jith says:

    Its like avoiding tax. You put loses in your balance sheet and government is like ok no tax for you. It has become a trend for most online business models.

  6. LoveSpinShow says:

    Uber is making uber money they are pushing it on development to avoid taxes

  7. The Studio says:

    Uber and Lyft are the modern incarnation of the robber barons. They do need to be fought, to be resisted. But drivers need to stop waiting for someone to come save them. NO ONE is coming. The must resist. They must BE the resistance. They have to stop whining and start acting. Together. It's so easy. So very easy to hurt these companies in a big, big way. As soon as drivers stop waiting to be saved.

  8. john lerner says:

    UBER IS A CRIMINAL ANTI AMERICAN TERRORIST GROUP THAT MAKES A LIVING OFF BANKRUPTING THEIR OWN WORK FORCE.
    DRIVERS MAKE THEM ALL THE MONEY, BUT NOW THEY ROB THEM FOR EVERYTHING, ONLY GIVING THEM A LITTLE MORE THAN GAS COSTS.
    UBER IS A DOMESTIC TERRORIST GROUP AND NEEDS TO BE BANNED FROM AMERICA!

  9. D mahantesha naik says:

    Please stop uber service in India 😭

  10. cortezforever says:

    Uber will only work without drivers, too many issues.

  11. Drum Videos & Drum Solos says:

    Uber will end up being purchased out of bankruptcy by a major car manufacturer.

  12. Javier Jaime Robles says:

    Greedy Americans

  13. Easy Does It says:

    ubers loses money not because of driver rates. it's those bloated executive salaries and the ridiculous amounts of money they pay to companies who are outsources

  14. encinobalboa says:

    The second Uber turns a profit, competition will flood the market. The product is generic and the app can be replicated. Competition will keep ride prices low as competitors jockey for market share. This is already happening with Lyft and Uber and neither are profitable. Ride share companies are not Amazon. Amazon has no competition and it has so much infrastructure in place that it cannot be easily replicated.

  15. A. Kent says:

    The moment they do right by the drivers, they'll never have a profitable penny….. NEVER!

  16. Edward Yamada says:

    And the IPO isn’t going well. See what happens when you cut driver pay, especially with their top drivers? The dime a dozen drivers, mostly uneducated foreigners, they go through like toilet tissue.

  17. Edward Yamada says:

    Uber and Lyft are losing customers to their top drivers, which siphons the A list customers who are put off by bad drivers. Most business professionals and the wealthy prefer private drivers who have proven themselves to be safe drivers with Uber. How do I request you next time? is a frequent question that their good drivers, usually retired educated professionals themselves, often get. It doesn’t take much to poach them. If thousands are doing that, the rideshare companies lose their 25% and those customers rarely return. Once they prove themselves to, say, the wife, they end up taking the entire family, compounding the loss. Lack of due diligence in screening their drivers will ultimately lead to their ulterior goal, driverless cars. And most of their good customers will be lost. That’s why investors are wary of both.

  18. Mohamed Abdi says:

    I’ve spend thousands on Uber I need my refund

  19. MsSunhappy says:

    5:45 he look like andy Bernard

  20. Thincow says:

    I will never forgo owning a car.

  21. polyverse1 says:

    People will forego owing their own cars in exchange for uber?" Lol stupidest thing I've ever heard! Maybe unmarried childless couple will but families never!

  22. Gemini Love says:

    It amazes me how all the people at the bottom do all the work but all the money goes to the top. We let these companies use us to make money while we do all the work and can barely pay our bills. When workers come together, quit working these jobs, these businesses will get it together…but too many people live in fear and will continue to be a slave for a little bit of money….the working poor! Slave mentality is just as bad as corporate greed!

  23. SFB says:

    because its an evil company

  24. Debbie Cakes says:

    Don't blame the driver….blame the passengers for being cheap

  25. Kristian Mandrup says:

    Most “unicorn” startups since the mid 90s are pyramid scams.

  26. Pretty Boy Pete. says:

    Yea , Uber is loosing money. But they can pay 45million to CEO. Uber CEO Dara Khosrowshahi salary and total compensation: $45 million – Business Insider.Apr 11, 2019.

  27. Rick Perez says:

    This is the best time to stop driving for Uber, I drove for Uber before and at the end of the day after you deduct all your expenses gas, wear and tear, ect you making about 9 to 10 an hour. Uber lately is taking 40 to 60 % of rides. I won't work for a company that's takes all the money they want from my hard work so they can invest on how to give me the boot. THAT'S THE STUPIDEST THING EVER, YOU TAKE MORE FROM ME SO YOU CAN INVEST ON MY REPLACEMENT.!!!!!!!!!!! IT IS UP TO YOU DRIVERS TO BE STUPID THERE ARE OTHER BETTER OPTION!!!!!!!!!

  28. A P says:

    I dont know if Uber uses outside credit card processing companies. if it does that cost can be eliminated by doing its own processing. However, I believe that Uber is spending money on developing driverless cars.

  29. Arjun K says:

    Uber was started as a way for people to earn extra money apart from their daily jobs. So that model worked initially and few drivers earned hell lot of money due to incentives. But now majority of drivers work full time as Uber drivers and this model is not supported by Uber. They have to make a change which they haven't done yet. I have sympathy for Uber drivers but future is not with them. With self driving vehicles driving jobs will become redundant in not so near future.

  30. Hugo Maravilla Ortiz says:

    Yet the top Uber executives are buying new houses, cars and living like royalty.
    Sure losing.

  31. sanhla aung says:

    I drive Uber for a month then I stopped now I work in a restaurant $ 12.00 per hrs better than drive Uber

  32. Johnny McLeod says:

    You think you know about Uber driver and how they pay get paid

  33. Eden Chan says:

    I don't understand…. Your own car is already an on-demand vehicle….

  34. Fredmfk2005 says:

    Can't wait till this company goes belly up. All they do is take advantage of people who need money. And yes I've never drove for them. Or lyft for that matter they are not any better.

  35. KaptainBasketball says:

    Niceee

  36. Black Heart says:

    Giving up my car, I don’t think so.
    May be partner with lots of clubs and pubs so I can get wasted and in need of Uber more often 😅
    Also, what happened to the idea of creating a sort of capsule rail system what would allow you to set your destination giving you privacy, almost like a personal cab. 😅
    All the time good ideas are replaced by great ideas and Uber seems like it would be replaced any time now or at least for a different company model.

  37. It's always sunny in Goa says:

    In order to make uber a success they need to make super low fares it can only be achieved by lower pays to the drivers or finding cheaper alternative to them ,so individual cab owners have no future in this business as sooner or later there will be self driving ubers available

  38. Dani Wayne says:

    Uber needs to be shut down!

  39. Jordan Crowley says:

    They are unreliable, with no integrity, no consistency, and the work client support services to date.

  40. Joshua D says:

    The only reason uber doesnt make money is because their spending is higher than their earning. Just my thoughts

  41. Sandeep Joshi says:

    The ride charge substantially changes during booking to when we have to pay at the end of the ride. That's cheating by Uber.

  42. SAMURAIKYOZZ says:

    The research done for this video makes little sense right now. Just look at the statistics:
    (1)
    the Uber app has 500 millions download (this means more people use it = customers). While Lyft has only 10 millions downloads (less customers).

    (2)
    Lyft pays less to its drivers, which forces more of them to quit. Which also means less income for Lyft. While Uber still pays the drivers a little more, which means drivers make more money and Uber takes away a certain percentage from each ride.

    (3)
    The video says Uber has to pay the driver. Really!!!!!!? I don't think so. I'm a driver for Uber and Lyft and all I do is have my app downloaded, use my car and my fuel to give ride, charge a rightful fee for my service, and Uber takes away a percentage from my earnings. In a sense, uber is just an app that allows me to get in touch with the customers.

    There is just so much misleading information in this video that only an Uber or Lyft driver would understand.

  43. fred hernandez says:

    Going to be Tesla Uber you dumbasses

  44. TechWorld 007 says:

    😂🤣 really not making money? Drivers don't get paid the bare minimum.

  45. The King of Pasadena says:

    No. They won't make any money ever

  46. Bughatii Lovren says:

    Deidra loosing that weight

  47. Ash The Pokemon Master says:

    Because it is not gaining any.

  48. Teguh Santoso says:

    39 countries but failed in South east asia

  49. Bethpage Taxi and Airport Service says:

    Use #local #taxis like Bethpage Taxi and Airport Service

  50. The Heat Inferno says:

    Self driving cars won't work. They can't even get Google maps to work right all the time lol.

  51. Ikonya Warachi says:

    Uber is a case of taking on too much in too short a time.

  52. Indie Fury says:

    Not Uber but Fubar with Fuber

  53. KiLLA CAiN says:

    Uber is over evaluated.. they’re faking their stats for sure. Waste mans

  54. Ryan D says:

    The guys thumb in the thumbnail looks like a big toe

  55. Fat Woolly Temp Worker Hoser Canuck eh says:

    Passengers drugs make the ride unsavoury. If nobody did crack uber may have interest keeping business but it's way too f**ked up.

  56. Manny says:

    "drivers united, will never be defeated"……well till self driving cars become more advanced and standard

  57. Mickiii P says:

    CNJewBC

  58. Sigma Geranimo says:

    Any App to rent a person to talk to or be friend with ?

  59. AL says:

    Uber losing money because upper level management lavish life style and millions wasted in law suits

  60. Rabgang TenZing Wangdue says:

    uber drivers should do strike for not driving uber for one month all over the world. lets see what they can change. they definitely increase the wages for the drivers. 27% deduction from uber should be included tax like other employee do. one thing i can say they can't replace the human drivers with robot for now and future. one Robot can drive like human being is a science fiction story not in real life.

  61. Nathan Kelly says:

    Uber and Lyft are like satellite radio. They’re gonna figure out the only way to profitability is by merging and by the time they do that, the iPod of transportation will come. Boom, no more Uber

  62. Rahim Marakkar says:

    Operating loss $3 BILLION??? It's a huge sum. Look like they have given $100 to each rider as tips just like giving tips at restaurants….. NONSENSE!!!

  63. These Nuts says:

    Uber and Lyft are great for riders but not for drivers. I feel bad for the yellow cabs they basically ruined the transportation market. Ultimately, they are just using drivers until the self driving cars become legit.

  64. OneTruNuwind says:

    75 billion? Lmao can’t wait till these ride share companies go out of business

  65. Hoover E Londono says:

    Uber + Tesla + Toyota
    Worlds largest transport company .
    10 x bigger than all others

  66. Jeff Brockman says:

    I drove for 3 months….last month was over saturated…..I made good money for awhile….but eventually….the ware and tear on your vehicle will catch up with you….drivers bragging about their pay on social media caused the saturation. I looked this up….90 percent of drivers don’t last 1 year. Uber doesn’t stand behind the driver.

  67. Dhiraj Singh says:

    Uber is dying since the rise of Fake Taxi 😂😂

  68. jonz23m says:

    Self driving vehicles will be even less financially viable for them. They just do it to keep their investors dreaming and that investor money flowing. Classic Silicon Valley Bubble Ponzi.

  69. King Kang says:

    $1.2T in personal transporation in the US? I call BS on that one.

  70. ASGAR Q says:

    I hate Uber

  71. Lube Oman says:

    5:35 wework 😂

  72. Jay-be Ray says:

    Like them or hate them; they will dominate… Dont so many people hate fb, google and other big corporations for stealing people's data? Have they gone out of business ? … Its not long before the self-driving takes over. It will cost them for gas/ maintenance etc- but their profit will shoot upwards. Soon the job of taxi drivers will become as extinct as the dinosaurs. Taxi drivers need to adapt NOW. Uber have already won the game especially with heavy investment into self-driving tech. They already are the amazon of transportation . Even if their self-driving tech sucks ; tesla will lease / sell them their cars and auto -pilot tech

  73. Adil Alfa says:

    I dont use either. I just drive my car. Its way cheaper.

  74. Rajkumar Selvaraj says:

    When did Monica left PiedPiper and joined CNBC ?

  75. Tom Lever says:

    This video does not explain WHY Uber is losing money. 🙁

  76. Billy Russo says:

    Uber facilitates the deal between two parties. They should basically get the 10% broker fee. In what world does the broker get to keep 59% of the income? and they are saying that drivers are asking more. They never gave us enough to being with

  77. James Smith says:

    Hahaha ditching my car that’s funny

  78. Mohammed Alam says:

    Uber ripping of they’re driver .. They’re smartly Ripping Uber driver 😞

  79. Mohammed Alam says:

    Uber is big scammers.💰💰💰. Uber they don’t take care they’re driver .

  80. edy paquiao says:

    Lets say driverless cars come in right now imagine how much it will cost to get a ride on one of those all I say is not gonna be cheap as it is now to much investment to recoup and make a profit out of that situation.

  81. Siddharth Ramachandran says:

    Love for uber…. It brings lots of employment ….
    I hope uber doesnt lose this ideologu

  82. Carl Jessen says:

    Read the CEO of Uber makes $35 mil. Back him down to $5 mil. and voila…. $30 mil. Profit.

  83. 1 Million Subs With A Few Videos Challenge says:

    Why Uber is losing money? What about the Drivers.

  84. Ramiro Garcia says:

    So basically they cant pay drivers more because they spend all of their money on finding ways to replace them.

  85. youtub34345 says:

    When you're buying an Uber stock – you're BETTING on the future of transportation. There is no room for betting in investment. If you wanna bet – go to Vegas.

  86. Calisthenicsnoob says:

    They hope ppl would stop buying cars and use uber!? They must be high as fk to hope for that

  87. Stephen Dubya says:

    A hilarious joke to play on Uber would be a hack that paid like 98% of the fare to the drivers, even just for a day. They could keep the 2% to keep the lights on.

  88. Gevian Dargan says:

    Replacing taxicabs? Yeah. Replacing car ownership? Nah. Not at those prices. They would have to be able to replace public transportation first.

  89. WWTormentor says:

    The reason why Uber worked when it first car out was because of the recession people needed to work and would do any work. But as the economy has grown stronger and drivers realizing that in the long run they are losing money (when you include cost of gas, maintenance, insurance, and having to pay the taxes that Uber doesn’t) it’s a matter of time until Uber can’t hire enough drivers anymore and lose money. Any company that exploits its employees can only profit during poor economy. Until Uber figures out a way to make their drivers profitable ad well, they will not survive. At least not their ride sharing portion.

  90. Sōshi Miketsukami says:

    Currently I dont have a car so I get to work and home via uber and it costs me roughly $600 a month.

  91. Nishikant Kalanke says:

    Gary be like I knew it years ago

  92. Zaneta Horvatovavavarenzanetavndor says:

    Namenzuzanakorpovahagedortstrat29/deneteet

  93. Stephan Klabbers says:

    It mentioned Uber want to be global, not sure they will have a comeback in east asia, Grab bought them out and replaced them in Vietnam and Philippines and maybe more markets. The Chinese have their own versions, as is expected.

  94. Karl Jacob says:

    In Australia we also have two more company's DiDi and Ola and they are way cheaper than Uber here in Australia now.

  95. Debasish Ray Chawdhuri says:

    In India, Uber is profitable. Before Uber / other cab services, cab drivers would wait all day in some specific places waiting for customers and only make 2-3 trips per day. Now they do 20, albeit at a lower rate per km. Before Uber came up, I had never seen cab drivers complain about making less than software engineers (they do make more than entry-level software engineers in India). Once a driver was complaining to me about how unfairly Uber treats them. I asked him what he used to do before Uber came up. He said he had no income before Uber. I said I rest my case.

  96. barbara francis says:

    stop telling drivers you'll tip them in the app. and then don't! The people that leave tips don't even say they are going to.

  97. Imran Khan says:

    Uber is 75 billions dollar company and I'm a driver struggling to pay my emi🤔

  98. Alex Arrieta says:

    These people are complaining about Uber but no one is making you be a Uber or Lyft driver??!

  99. run_frictionless says:

    Many investors criticised Jeff Bazos for the years of losses that Amazon sustained. What those investors and investors in Uber fail to understand, is that these internet startups, are doing what traditional businesses did in 50 years. Traditional businesses could afford to take a slow organic approach to scaling because they faced less competition.

    The moment internet companies show revenue, competitors come and keep coming. Internet startups have to grow on steroids. If they don't they face losing market share. That means spending, spending big, and not stop spending.

    Over the long run the company will spend what the 50 year old company did, just in a shorter space of time.

  100. A T says:

    Yesterday I was about to call an Uber and it alerted me that they are no longer doing set prices however now they’re doing estimated prices which means I will never take Uber again as I’m not trying to play Russian roulette with my bank account! Lyft it is from here on out because at least I know where I stand and how much I will pay for a ride! On another note I have had far more terrible driver experiences with Uber than Lyft including sexual harassment, ridiculously dirty cars, poor navigating, intoxicated drivers, drivers who cancel when they arrive and see my destination is across the bay bridge, unsafe drivers, cars not matching the description or license plate in which I would not get in and the driver replied “suit yourself then. You’ll pay the cancellation fee then” I did not! I’ve only had very minor issues with Lyft drivers like they’re annoying and want to talk too much! Uber sucks and I’m done and that includes Uber eats as well because their drivers are lazy and think that I’m paying a service fee to walk down to the street and get my food!!! Every other delivery service comes to my door! 👎🏽👎🏽👎🏽

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