Uber Stock Falls After $5.2 Billion Loss, Sales Miss Estimates

Uber Stock Falls After $5.2 Billion Loss, Sales Miss Estimates

Uber failed to assure investors of its growth potential or that it can turn a profit anytime soon, according to Bloomberg. The ride-hailing company reported second-quarter adjusted sales that fell short of estimates and posted a net loss of $5.24 billion, by far the largest ever for the business.

Most of that loss was attributed to stock-based compensation associated with the initial public offering in May, a routine expense for newly public companies. The adjusted loss, a more commonly used metric for ride-hailing companies, which excludes interest, tax and other expenses, more than doubled to $656 million but wasn’t as large as the $979.1 million analysts expected.

What really raised concerns, though, was Uber’s disappointing sales growth. Adjusted revenue in the second quarter increased 12% from a year earlier, the slowest rate in the company’s history. The company generated $2.87 billion in adjusted revenue for the second quarter, below estimates of $3.05 billion, according to data compiled by Bloomberg.

Uber hasn’t even been public for three months, but investors are wondering how long it can keep growing. CEO Dara Khosrowshahi suggested the business had a broader problem with bloat last week, when the company said it would cut about 400 employees in marketing. On a call with reporters, Khosrowshahi acknowledged those concerns, while defending the business as one with “growth rates that companies at our scale would kill for.” However, he said, “the law of large numbers at some point will catch up with you.”

Khosrowshahi emphasized signs of growth potential during a conference call following the report. Gross bookings, a number used to track customer demand, rose 31% to $15.76 billion. Uber expects to maintain that growth rate for the year, forecasting $65 billion to $67 billion in gross bookings.

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