Uber Technologies Inc made a loss of $509 this year, said the company on Wednesday.
The company increased incentives to a massive number of drives to come back to their platform. This led to a dramatic drop in the company’s share in just few working hours.
As big cities like New York imposed new pandemic restrictions, investors sold their shares. Uber’s administration assured them that the company will achieve a high profitability. But no one listened.
The company announced an adjusted $509 million loss in the second quarter. This loss comes before taxes, interest, and amortization.
Amortization is a business term that provides the initial cost of an asset. In the context of Uber, it excludes one-time costs, in addition to the stock compensation. That increased the loss $150 compared to the first quarter.
According to Refinitiv data, analysts predicted that Uber will announce an adjusted EBITDA loss of almost $324.5 million.
While COVID-19 new variants appear, Uber alerted investors that the recovery will take a long time.
Analysts and third quarter expectations
Khosrowshahi, Uber Chief Executive Dara, told on call conference Uber’s food delivery business balanced things after the ride-hail loss. The trends of July reinforce the confidence of Uber to improve in the third quarter.
Although bookings hit an all-time record of around $22 billion, driver supply and COVID-19 pandemic affected the earnings.
As there is a shortage of drivers amid high demands, investors are concerned. The shortage is still ongoing.
However, Uber told analysts that drivers came back to their platform in July. Greater numbers returned. The company hopes the trend continues in the coming months.
They declared that the profits will greatly increase amid huge drops in U.S. and Canadian investments in drivers. This also happened in other markets, including Australia.
It is worth noting that Uber in the second quarter paid a huge $250 million in driver entice investment, casing great loss in their business.
The company’s goal is to hit a profitability on an adjusted EBITDA basis by the end of the year. This will make a recovery of $100 million in the third quarter.