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Uber losses reduced, but is it enough?

25 Aug 2017

 

 

The latest financial figures are out for the controversial minicab firm Uber. Whilst it shows a reduction in losses, here at TaxiPoint we question whether it will be enough to keep Uber moving forward and to make it eventually profitable. 

 

The stats show Uber made a loss of $645 million in the second quarter of 2017. The figures published by Axios show a reduction in losses from the first quarter of 9%.

 

Here's the big one though. Uber have burnt a total of $8.4 billion and have only $6.6 billion in cash reserves.

 

Now $6.6 billion might sound a lot, but when your losses are so high and your growth isn't keeping up with your cash reserve, there is a time limit when the money will run out.

 

If Uber continue with its current model, charging the drivers the same percentage and offering fares at the same price to customers, Uber will run out of money by 2020.

These figures will be worrying Uber executives and any CEO that is thinking of risking their reputation taking on a company running at such huge losses each quarter.

 

The business model must change at some point whether it be increasing driver fees or raising the cost of each ride.

 

It is worth noting that a study in 2015 showed that each ride is subsidised by roughly 59%. To add value to the product by that amount just to break even, has caused investors a lot of sleepless nights worrying about the value of the product on offer.

 

Uber relied on cheap fares to decimate the taxi industry across the world. However taxis are here to stay. Some markets like New York are struggling badly, however the majority of taxi services have managed to see off a decrease in revenue by working more hours.

 

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