Uber Records Losses Due to IPO and High Competition

Uber received a record loss of $ 5.2 billion in the second quarter. According to reports, for the 2019 fiscal year, service losses increased almost six times. In the second quarter of 2018, losses amounted to only $ 878 million. Over the reporting period, Uber’s revenue increased by only 14% – from $ 2.78 billion to $ 3.17 billion.      Source: RBC   The increase in losses is associated with high IPO expenses. According to reports, Uber spent $ 3.9 billion on this. The company paid about $ 300 million more in connection with access to the exchange for its drivers. The Wall Street Journal also cites the high level of competition in world markets, the costs of subsidizing tariffs and attracting drivers as one of the reasons.    The overall financial performance of the company shows a downward trend. In the first quarter of the year, Uber lost $ 1.01 billion and revenue of nearly $ 3.1 billion.   According to the company, the number of travel bookings using the service increased by 31% compared to the same period last year.   In 2019, Uber became a public company. During the IPO, $ 8.1 billion was raised, although it was planned that access to the exchange would bring $ 10 billion. After the IPO, the capitalization of Uber amounted to about $ 76 billion. Despite the fact that the IPO Uber became one of the largest on the exchange in 2019, experts called it a failure.   Uber CEO Dara Khosrovshahi believes that 2019 will be the peak year for the company in terms of losses, then losses will decrease in 2020 and 2021, Forbes writes.    “We continue to have new markets. We still have companies like Uber Eats that show amazing growth rates, ”Khosrovshahi said.   The company’s management fired 400 of the 1,200 employees in the marketing department in order to optimize the unit against the backdrop of poor financial performance, writes Inc.   The service begins to develop other lines of business. Uber Eats revenue for the quarter grew by 72%. The service will launch Uber Air taxi in Australia by 2023, and this service will also appear in two American cities.   In Russia, Uber has merged its business with Yandex.Taxi. In 2018, companies closed a business combination transaction in Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan. In the combined company, Yandex received a 59.3% stake, Uber – 36.9%.