Uber Lost $1.27 Billion Within Six Months

Hi-Tech Silvia Meyer
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Multibillion-dollar company Uber lost over $1.27 billion during the first half of this year according to reports from Bloomberg. $1.27 billion is a whole lot of money for any business to lose. Although being the most valuable startup in the world, losing this amount may not be considered as such a big deal for Uber which was recently valued at $62.5.

Bloomberg claims that the majority of Uber’s losses came from the extraordinary amount of subsidies the company offers its drivers. Most of these drivers operate in China, where Uber was locked in a very expensive competition with a China’s ride-hail app, Didi Chuxing.

Uber and competitor Lyft are still in business because they have competent drivers. They have drivers who are always ready to go where riders are. Other ride-hail companies try to command driver loyalty by letting them have more than the usual 75–80 percent per fare. They spend lots of money on promotions and marketing such as fare discounts and juicy giveaways. Despite their efforts, riders will always prefer the cheapest option.

Uber finally came to terms with the fact that it wasn’t going to beat Didi, and subsequently cut its losses selling its Chinese operations over to Didi. The benefit of the sellout is that Uber won’t get any losses from or related to China on their balance sheet after Aug. 31.

A spokesperson for Lyft made this statement: “Uber’s US market share numbers are misleading statistics given because they offer services in many more cities than Lyft. Our share within the main US regions, where the majority of rides occur, is more than 20 percent and grows regularly. Our impressive record should be attributed to the diligence and perseverance of our team members who strive continuously to treat people better and offer programs like in-app tipping that make drivers happier, with better experiences and happier passengers during rides.”