SAN FRANCISCO – Technology companies rarely earn money before they become public. Twitter was unprofitable when it was listed on the stock market. This also applies to Snap, Spotify and SurveyMonkey.
For Uber, the question is whether the attraction that prepares for a public offer on the ride is even greater than whether it can earn the money. This is because the company, the leading tech start-up of its generation, will set the bar for other well-known tech companies such as Slack and Lyft, while they are also chasing the stock market this year.
Up to now Uber does not make any favors for profit.
The company reported on Friday that it had reduced its net loss in the fourth quarter of 2018 compared to a year earlier. But with the exception of certain one-off items, including the sale of some of its business, Uber's loss for the quarter increased 88 percent from the previous year to $ 842 million.
The losses were due to the fact that Uber has increased its expenses because it is trying to outdo competitors, many of which have intensified their efforts to add riders and drivers. Uber has responded by offering greater incentives and more promotions to fend off rivals such as DoorDash, Lyft and other services for unrolling couriers and food.
Uber made his financial disclosure when it deals with what is one of the largest public offers ever by a technology company. Uber, a transportation company, had a private value of more than $ 70 billion last year, and proposals from investment bankers suggest that it could be worth $ 120 billion after it became public. Share selling will create huge windfalls for Uber's many investors, and for its founders and early employees.
As a private company, Uber is not obliged to disclose financial results. But it has done this regularly over the last two years to inform investors about its activities and perhaps to keep the depth of its losses as a surprise later.
The latest figures, probably Uber's latest as a private company, will be closely monitored. Many investors initially give young and fast-growing tech start-ups the chance to lose money, but questions about the question of whether such companies can ultimately be profitable are eventually taken up. Investors had criticized Twitter for gaining losses before it finally started earning money last year, and they have lowered the share price of Snap since the public offering, partly because the company is still very unprofitable.
In a statement, the chief financial officer of Uber, Nelson Chai, did not discuss the company's losses. He said that Uber had retained the category leadership in his rendezvous, and he also noticed other bright spots, including the freight management company and the budding e-bike and scooter program.
Uber has a long history with spending large sums of money. Ride-hailing is inherently an expensive business that requires companies to expand into new growth markets, pay to recruit drivers and lower prices to remove business from competitors.
Dara Khosrowshahi, Uber's chief executive, is under pressure to compensate for the losses, and the company has withdrawn from money loss markets such as Russia and Southeast Asia.
Some losses of the company have been overshadowed by the explosive growth. In 2018, Uber increased its total bookings – providing customers with rides and meals – to $ 50 billion, up 45 percent from 2017. Net sales were $ 11.3 billion, an increase of 43 percent.
The company's net sales for the fourth quarter of last year were $ 3 billion, an increase of 25 percent from a year earlier and gross bookings up 37 percent to $ 14.2 billion. The company has $ 6.4 billion in cash and the net loss was $ 865 million.
But Uber's profit margins have dropped because it lowered the prices to match competitors and spent money on the expansion of its foodservice company, Uber Eats. The margins are also smaller on orders from Uber Eats because the company pays commissions to restaurants and delivery staff.
Uber's self-driving car program, which probably will not generate revenue for years, will continue to burn cash. The company returned its autonomous vehicles to the public highway in December after a break of 10 months, which was prompted when one of its vehicles fatally hit a pedestrian in Arizona.