Say goodbye to cheap fares. Uber’s in a spot of bother.
Following a $5.2 billion loss in its quarterly results, everyone’s favourite ride-hailing service is under fire from investors as the Californian brand’s growth continues to slow month-on-month. So much so, that the loss reported was an astonishing 50% larger than expected, with the publicly-traded company saw a 7% drop in its stock in just a day.
Unlike many companies, an organisation of Uber’s size can cope with this colossal loss, although alarm bells will be ringing from both sides of the board room. Shareholders are starting to fidget due to slow growth and underperforming revenue, concerned about the lack of performance and profitability. Uber must address this right away.
However, this is bad news for consumers on the other end of the stick, who will now be hit with large price hikes for the ride-hailing service – most notably in high-demand areas and peak times, such as sporting events and rush hour.
But even this might not be enough for Uber which, due to the sheer magnitude of this loss and existing business structure, may not see profitability until the end of this decade when CEO Dara Khosrowshahi can look to implement self-driving technology to trim Uber’s wage structure. Without removing drivers, the company will be caught in limbo between competitive pricing and profitability of the business.
But will its investors be prepared to wait this out? I think not.