Uber Falls To All-Time Low As Investors Start To Jump Ship
Last week the world's top ride-hailing platform, Uber, reported its first full-quarter earnings and the numbers were simply terrible: loss of $4.72 per share versus an expected loss of $3.12.
Uber (NYSE:UBER)shares closed today at their lowest level since the company's IPO as investors are becoming increasingly wary of Uber's ability to shore up its losses or its ability to ever turn a profit. The stock closed down 7.6% to $37 flat which actually beats its previous low of $37.10.
CEO Khosrowshahi recently spoke on the subject and characterized the company's huge quarterly loss as a "once-in-a-lifetime" event due to stock compensation relating to the firm's IPO. We can read that as Uber had a slew of employee contracts that ultimately made many people quite rich after the IPO.
If we slice out the stock-based compensation, Uber's losses were a more mundane $1.3 billion for the quarter which exceeded the previous quarters billion dollar loss by around 30%.
Despite investors jumping ship, some analysts are saying to not lose faith quite yet.
"While there are considerable risks in ownership across the space given the intense competition, regulatory issues, and operating pressures, we continue to believe the risk/reward in owning the leader in this space is favorable and we remain Buy-rated," Goldman Sachs' Heath Terry told clients late last week.
It's hard to decide on what to make of Uber and even its rival Lyft (NASDAQ:LYFT). The companies started out by showing simply massive user growth and seemed poised to transform transportation as we know it. Now that both are public and we have a much higher level of detail and awareness in terms of their business models, many are stepping back and scratching their heads.
It seems that the way-better-than-yellow-taxi prices that (along with ordering rides on a cell phone convenience) propelled each into their respective positions, will soon give way to higher prices as pressure mounts to become profitable. The next 18 months will likely give us a good idea if Uber will be able to magically transform billion-dollar losses to billion-dollar profits.