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Did Uber just burst the sharing economy bubble? - Roadshow

Jul 5th 2020, 2:38 am
Posted by clemmiefra
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Uber's posted some serious losses this year.

Zhang Peng, LightRocket via Getty Images

Uber's attached to another big number. But it's probably not happy about this one.

By the end of 2015, http://www.apmaine.com/munjoyhillc/mediawiki/index.php?title=Sam_Billings_Hits_Half_Century_While_Eoin_Morgan_Disappoints_In_IPL the ride-hailing company was valued at $62.5 billion. It closed $1.6 billion in financing in January 2015, raised $2 billion in Leveraged-Loan Market in June 2016 and raised around that same time.

Today is a different story. Bloomberg, citing people familiar with the matter, reports losses for Uber in first half of 2016 total at least $1.27 billion.

The loss throws into question the narrative of the burgeoning sharing economy. The repurposing of resources like cars and apartments is supposed to create jobs, upend businesses and change the way we live. But what does that mean when Uber, one of the giants of this movement, can't turn a profit?

The numbers are discouraging. Uber lost $520 million before taxes, depreciation and amortization, according to Bloomberg. In the second quarter, it lost at least $750 million. Also worrisome were the losses incurred in the US, where it is firmly established in many cities.

Because Uber is a private company, it doesn't have an obligation to disclose its finances. Uber's head of finance, Gautam Gupta, revealed the numbers on a call with shareholders, Bloomberg said, citing anonymous sources.

Uber did not immediately respond to a request for comment.

Gupta attributed the majority of the losses globally to subsidies for Uber drivers, Bloomberg said.

This could be a low point for a company, and given the deal it struck, merging Uber China with Chinese competitor Didi Chuxing at the beginning of August, losses will probably fall going forward because its balance sheet won't have losses from China, according to Bloomberg. That'll help, but is it enough? One idea is that Uber can turn its attention elsewhere.

Altimeter analyst Brian Solis compares Uber to Amazon, another company that's posted losses, but ultimately has much bigger ambitions than just e-commerce. The company wants to change the way you make purchases.

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