Ride-hailing giant Uber Technologies Inc sank deeper into loss from July to September as it tried to outspend competitors with discounts and loss-making new business ventures, the company reported on Monday in the United States.
Uber’s shares fell 5.5 percent in after-hours trading despite Uber Chief Executive Dara Khosrowshahi saying that the company would become profitable by the end of 2021.
Overall, the company’s net loss widened to $1.16bn in the three months ended September 30, from $986m a year earlier, while net loss on a per-share basis narrowed to 68 cents from $2.21.
Khosrowshahi told journalists on a conference call that the company as a whole would achieve profitability on adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) for the full year of 2021.
EBITDA measures how profitable a company’s operations are.
However, the CEO declined to provide details on the expected performance of individual business units by that time.
The move follows a similar announcement by Uber’s smaller ride-hailing competitor Lyft Inc days earlier, which also said it expects to turn a profit by 2021 as revenues increase.
Uber is seeing a similar trend. Its gross bookings, which include ride-hailing, mobility, food delivery and freight payments, rose 29 percent from a year earlier to $16.47bn.
It collected total third-quarter revenues of $3.81bn, up nearly 30 percent compared to the same period last year, beating estimates of $3.69bn.
But while Uber posted better-than-expected revenues in its third quarter, its costs jumped about 33 percent to $4.92bn over the same period.
Shareholders so far appear unimpressed, as Uber’s stock has lost some 30 percent since going public in May.
Its share price is expected to be squeezed further on Wednesday, when a restriction on selling stock lifts. Some analysts expect more than 80 percent of the company’s outstanding shares will become eligible for sale.
Known for its ride-hailing app available in more than 700 cities worldwide, Uber has vastly diversified its business over the past few years.
The company is building out its long-haul trucking and food delivery business Uber Eats, developing self-driving cars, offering banking services to its drivers and even planning commercial passenger drone shuttles by 2023.
Sales from Uber Eats, the company’s fastest-growing unit, rose 64 percent, but nearly 40 percent of revenues were spent on incentive and referral payments, as Uber tries to gain market share.
“At least over the next couple of quarters we still see a lot of money flowing into (Eats),” Uber Chief Financial Officer Nelson Chai said during a Monday analyst call.
But investing in these new ventures is also costing the company its profitability.
“Uber would be EBITDA positive if it wasn’t also investing in Uber Eats, the freight operation and autonomous driving capabilities,” said Atlantic Equities analyst James Cordwell.
Uber, like other “gig economy” businesses, will face additional pressure from new worker regulations as it largely relies on freelance contractors.
A new California law, set to go into effect on January 1, would turn most of the state’s roughly 450,000 gig workers into full-time employees and has garnered nationwide attention.
Uber, Lyft and food delivery company DoorDash have pushed for separate legislation that would increase pay and benefits for drivers yet maintain their status as independent contractors.
Khosrowshahi on Monday said he was hoping US politicians would be willing to work with the industry.
“But if not, we’ll continue to aggressively defend our drivers’ right to flexibility,” the CEO said.