Uber lost $1.27 billion in the first half of 2016 as per reports , More than half of those losses, or around $750 million, accrued in the second quarter of this year.
“You won’t find too many technology companies that could lose this much money, this quickly,For a private business to raise as much capital as Uber has been able to is unprecedented.”
said Aswath Damodaran, a business professor at New York University who has written skeptically of Uber’s astronomical valuation on his blog.
Uber CEO Travis Kalanick said that while his company was losing $1 billion a year in China, its operations in its home country were stable. “We’re profitable in the USA,” he declared. But in the second quarter of 2016, Uber lost $750 million, including $100 million in the US.
Much of Uber’s heavy losses in the first half of the year were attributed to the company paying subsidies to attract riders and drivers, especially in China, according to two people with knowledge of the matter. Uber spent the last two years fighting a war in China against Didi Chuxing, the incumbent ride-hailing giant in the country. Both companies spent billions of dollars subsidizing rides in the race to gain market share, said these people, a practice that could not be sustained in the long run.
Uber has been engaged in a fierce price war with Lyft Inc. this year, and that has also contributed to the enormous losses. Uber told investors on Friday’s call that it’s willing to spend to maintain its market share in the U.S. The company told investors that it believes Uber has between 84 percent and 87 percent of the market in the U.S.
Uber and Lyft are only in business because of their drivers. And drivers are a fickle bunch — they go where the riders are. The ride-hail companies try to command loyalty by often letting them keep more than the 75–80 percent of each fare they typically pocket. They spend a lot of marketing and promotions, like fare discounts and giveaways. But riders will always trend toward the cheapest options.
Which is why Uber is investing so heavily in self-driving cars. It just spent $680 million on the autonomous trucking company Otto, in the interest of bolstering its own (likely very expensive) self-driving research and development.