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Uber is the biggest ride sharing app, easily outpacing its smaller rivals Lyft and Via. But the world’s best known car service app is losing huge amounts of cash.
According to a report from Bloomberg, the company lost big sums of money in the first and second quarters of 2016, raising significant questions about the firm’s business model.
Here are more details from Bloomberg:
“In the first quarter of this year, Uber lost about $520 million before interest, taxes, depreciation and amortization, according to people familiar with the matter. In the second quarter the losses significantly exceeded $750 million, including a roughly $100 million shortfall in the U.S., those people said. That means Uber’s losses in the first half of 2016 totaled at least $1.27 billion.
Subsidies for Uber’s drivers are responsible for the majority of the company’s losses globally, Gupta told investors, according to people familiar with the matter. An Uber spokesman declined to comment.”
This is something that is far too common for new technology companies. They’re solely focused on growth and user experience, rather than turning a profit.
While that’s an admirable strategy, at least in the early stages of a company, profit is key to survival.
Not to mention, the company has an enormous valuation, with various reports saying the company is worth in the neighborhood of $50 billion.