Uber reported its first earnings as a public company Thursday after the U.S. stock market closed. It wasn’t pretty: The company lost $1 billion on $3.1 billion in revenue during the first three months of 2019. Shares initially fell about 1% on the news.
Analysts are still skeptical that the money-losing ride-hail pioneer will ever become profitable, and for good reason: Uber lost $3 billion in 2018 and had predicted a loss of around $1 billion for the first quarter in a Securities and Exchange Commission filing before its May IPO.
Despite all the red ink, the company was valued at a whopping $75 billion when it went public in May, with shares priced at $45. They fell 7.6% on the first day of trading, however, and have drifted toward about $40 a share since.
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Uber has acknowledged that there are bumps along its unpaved road to profitability. The company is investing in products and services ranging from autonomous vehicles to meal delivery and freight services.
Another potential hurdle is Uber’s tense relationship with its drivers — arguably the company’s most valuable asset right now. Uber has acknowledged that its business model would be upended if drivers were to be classified as employees, rather than independent contractors, as they now are. Drivers pay for their own vehicles and expenses, including gas, insurance and more, and don’t receive health or retirement benefits.
“They are just a software company,” University of California economist Michael Reich said of Uber’s current business model on CBSN the week of the IPO.
Uber could face an especially big roadblock in California if a “gig work” bill, passed by the state Assembly on Wednesday, becomes the law. Hundreds of thousands of independent contractors, including mobile app drivers, could be reclassified as employees under the legislation, which states that in order to be deemed an independent contractor, a worker must not be controlled by the company or do work central to its business.
Some drivers appreciate the flexibility the gig affords them.
“What I love about this job is that I am the boss. I can work anytime. I can work two hours a day or 10 hours a day, it’s not like working for a company,” 23-year-old Uber driver Mohamed Fouad told CBS News before the company went public.
In other instances, drivers’ relationship with Uber is more adversarial.
Inder Parmar, 54, says the company treats him like a “slave driver,” but he’s loathe to abandon the $70,000 he’s invested in a vehicle, insurance and registration to work for the company.
