Uber’s not out of the woods yet

In 2023, Uber achieved an important milestone, earning much money than it spent for a afloat twelvemonth for nan first time. It was wide seen arsenic a motion that nan perennially cash-strapped business was yet connected a much sustainable path.

Today, location are signs that nan travel whitethorn beryllium longer than we thought.

The ridehailing and transportation institution reported a astonishment nett loss of $654 cardinal for nan first 4th of nan year, arsenic ineligible settlements and equity investments proved to beryllium much of a resistance connected Uber’s business than galore expected.

Wall Street analysts had been expecting a profit of $474 million, according to The Wall Street Journal. In particular, nan company’s never-ending ineligible battles complete nan classification of its drivers, arsenic good arsenic nan waning request successful definite markets, were seen arsenic slowing down Uber’s financial momentum.

Still, nan halfway aspects of Uber’s business look to beryllium strong. The company’s adjusted net of $1.4 cardinal were up 82 percent twelvemonth complete year. Uber’s gross bookings, aliases nan worth of nan transactions connected its app, grew 20 percent to $37.65 billion. Revenue was besides up 15 percent to $10.1 billion.

So why nan loss? In short, ineligible settlements, banal holdings successful different companies, and less rides successful cardinal markets for illustration Latin America. All of these factors person nan quality of being unrelated to Uber’s business of delivering group and equipment — but they are besides highly reflective of nan company’s halfway business model.

It’s nary concealed that Uber classifies its drivers arsenic independent contractors arsenic a measurement to trim labour costs and position itself arsenic simply an app that connects customers to enterprising freelancers who activity for aggregate ridehailing and transportation companies. And yet, for years, the institution has fought against attempts by section legislatures and courts to reclassify its drivers arsenic labor and salary them better.

The institution has spent tens of billions of dollars to reason these efforts, and while it occasionally wins, it doesn’t look to beryllium immoderate person to putting nan rumor to rest.

The latest loop is playing retired successful Minneapolis, wherever section leaders person announced caller costs authorities for Uber and Lyft drivers, prompting nan institution to frighten to time off nan metropolis if it passes. Driver classification fights are surfacing successful Massachusetts and California.

And erstwhile things look particularly grim, Uber settles — which is why nan company’s profitability is looking shakier than it should. Most recently, Uber agreed to extremity its conflict pinch Australian taxi drivers by agreeing to salary them $178 million.

Unlike its overmuch smaller rival Lyft, Uber is simply a world company, arguing that its standard gives it leverage successful its conflict to crook section labour rules to its will. And while location person been successes, it still seems arsenic if nan conflict will support going connected and on, unimpeded.

The Biden management has Uber and different gig system companies in its crosshairs. Depending connected enforcement, it could summation nan financial uncertainty swirling astir nan institution and further disrupt its plans for sustainable profits.

People don’t look to attraction that Uber is much expensive. But if nan institution had to abruptly commencement paying drivers afloat benefits and a surviving costs crossed awesome markets, that willingness could erode successful nan look of a overmuch much costly travel aliases takeout order.