Let’s break it down.
>Uber takes 25% of the money from each ride on the app.
>It does not pay for any of the costs involved in the actual rides, not fuel, insurance, or vehicle costs, all that is paid by the driver.
>Their customer service is outsourced to India
>Each city they operate in requires a tiny office with very few people, simply to screen drivers
>They maintain mobile apps to operate their service.
Now, based on this, there is no reason why they should not be turning a profit on their $11.27 Billion annual revenue. What causes the $1.8 billion loss?
In: Economics
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They’re not trying to make profits, they’re looking for a monopoly so they give out discounts and promotions and lose money in an effort to outlive their competition and then make a profit when they’re the only ones around. The investors keep pouring money into it because otherwise the company fails and they lose everything they’ve invested so far. It just doesn’t work like normal companies !
Uber lost billions already this year. 3 billion and some cause of stock compensation. 300 million cause of driver rewards (5 trips in a day nets you 5 bucks more, as an example). 3 billion in r and d. 1.6 billion for administrative costs. 1.2 billion for sales and marketing.
Even a few people at each office is still hundreds of thousands. The building. Support staff. Lawyers. Advertising. The list goes on. And it’s not so much just a straight up 25 percent goes to them of every ride as it might seem. A lot of rides cost them more than it earns them. 🙂
Just a small clarification, Raiser Inc (Uber) does provide commercial insurance for drivers.
Tesla for the first time ever had two sequential quarters where they made a profit in 2018. For a lot of companies, they tend to spend more on growth then they earn, with intentions of making it back in the future. Besides this, Uber has also had a lot of oopsie doopsie’s in the last few years.
they want total monopoly on the market… once they have that and all the traditional cabbies are out of money and other services cant keep up with their pricing then they will turn the screws and milk the population for every penny it has, so glad swansea district where i live denied them a license to operate, outr cabs are still super cheap thanks to competition
It’s two years old now, but definitely worth a listen.
[Uber – The Dollop](https://thedollop.libsyn.com/271-uber)
Don’t forget Uber is investing a lot of money in technology; most specifically on autonomous vehicles, flying taxis, drones etc.
“Failure to turn a profit” is actually cooking the books for tax purposes. Any good (shady) business owner knows better than to show profits.
First of all, they don’t really make 25% of the money of each ride, it’s actually a lot less than that. I don’t have the exact figure though, but some are barely breakeven. They keep their prices low to flush the competition out and the biggest gain market share possible.
Secondly, they spend a ton on advertising, R&D and promotions. People saying they just update their app don’t understand the vision Uber has. Imagine the same service in 5-10 years but with driverless electric cars. No drivers to pay, no fuel, only maintenance – which will be a minimum. That takes enormous infrastructure and testing. Investors keep Uber afloat with money because they know this WILL happen soon and at that point the profits will skyrocket.
Lastly, a lot of money is used in stock compensation for early investors that want to get out or higher ups in the company. It was a long time coming for a lot of them so many are cashing out and the company is paying for it.
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