Uber on Track to Lose $2.5 Billion This Year, Raising Questions About Sky-High Valuation

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Uber’s staggering rise to its status as a worldwide disruptor of a massive industry has garnered great fame—and a sizeable valuation of well over $60 billion, which has been called into question by critics.

To put it in comparison, Uber on paper is valued higher than the century-old General Motors and Ford brands. And Uber is less than six years old.

But wait: why? Sure, Uber is in almost every developed country in the world now, and users generally express positive feelings toward the experience of using an Uber versus a taxi. However, the company is bleeding serious dough.

According to sources cited in Bloomberg, Uber lost more than $500 million in the first quarter of this year, and more than $750 million in the second. Midway through 2016, Uber has lost roughly $1.3 billion.

Why is Uber losing so much money? The company’s head of finance, Gautam Gupta, says driver subsidies are to blame.

Despite being far from profitability, revenue is rising, and is expected to reach $4 billion this year.

Uber is believed to have lost around $2 billion in China alone over the past two years but the harshest blow might be losing access to a massive market, with huge growth potential. There are only 128 cars for every 1,000 people in China, and the country’s middle class continues to grow.

Can Uber Compete with Self-Driving Cars?

 

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