What Will It Take for Uber to Become Profitable?

What Will It Take for Uber to Become Profitable?

Uber's business model of focusing on growth over profits may be beginning to unravel. They are experiencing slowing growth, which financial experts explain is a problem when there are also no profits.

Key findings

"“You can get away with these large losses when the growth rates are quite high, because many of your expenses, of course, are investments in the future,” said David Wessels, adjunct professor of finance at Wharton. “But in this particular case, it’s just bad news when the numbers are so low.”"

"Leonard Sherman, adjunct professor of business at Columbia Business School, said what’s more troubling than the big loss is Uber’s difficulty in becoming profitable on an ongoing basis. “That number per se is not a worry,” he said, noting that it doesn’t even come close to making it to the top 10 worst quarterly losses in history. “The big number was their quarterly cash burn.” Uber’s profitability problem “continues to exist, with the added pressure that we now have essentially diluted current stockholders in a money-losing enterprise. And it’s not a pretty picture.”"

"Since inception, Uber has pushed its growth narrative, but that may no longer be acceptable, Sherman noted. “When you don’t have a profit story to tell, the only possible offset is [to say that] we’re growing like weeds,” he said. “The only possible future is to accept what should have been the way they approached this business from the beginning, which is to perfect [the business model] and then grow responsibly from there.”"

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