Washington - So how good was your year? Did your business
make money? Did your business lose money? Did your business lose $3 billion?
No? Uber did.
This is according to a Bloomberg report issued right
before the holidays. Of course, these are just estimates because the company is
privately held. But it's known that the company lost about $580 million in the
first quarter of the year and most believe another $800 million in both the
second and third quarters. These numbers don't include the losses the company
incurred in China where it was forced to pull out due to regulatory squabbles.
The company has earned the honour of losing the most money in the shortest time
ever, according to a report earlier this year in Gizmodo. No one from Uber
volunteered to accept that award - or comment to the publications on the latest
numbers for that matter.
Few businesses could sustain such staggering losses even
over a short period of time. So what is going on?
James Dennin, a writer for Mic, blames it partially on
the higher minimum wage trend across the country which is forcing the company
into "subsidising" (i.e. paying) its drivers so much that even as
revenues are increasing, the profit margins per ride are still not enough to
cover overhead, marketing and the huge investment the company is making in
autonomous vehicles. Management is banking that its self-driving cars will
reduce their drivers and bring the company's income statement into the black...
assuming that the self-driving cars actually work reliably and that the company
will get the necessary permissions to operate them.
Read also: Uber eyeing more new markets in Africa
Uber's playing a risky game. If it raised prices enough
to earn a reasonable profit, then it would likely drive away customers, and put
many drivers out of work. Even if the company succeeds in developing autonomous
vehicles, many drivers would be out of work.
Unfortunately, neither scenario seems like good news for
the tens of thousands of independent contractors, freelancers and entrepreneurs
who drive for Uber.