Introduction
One global company that has taken off like a rocket in recent years is Uber—the ride-sharing corporation whose business is based entirely on an app and the concept that people are willing to pick up other people in their own cars for a small fee, with transactions conducted entirely through the app. Uber became immensely popular following its inception in 2009 and has expanded across the world in short order, launching into various other forays and offshoots from the ride share concept: now there is Uber Eats, a food delivery service, and Uber’s investment in autonomous cars that drive themselves (the supposed future of driving). Questions remain, however, about Uber’s financials, particularly in the wake of its mounting cash burn problems, its dwindling valuation, and its exodus of financial officers and executives (). This paper will discuss Uber’s credibility and the financial issues it faces and how the company can turn its problems around.
Background
Uber is a private company that is currently facing a host of government probes and public criticisms regarding its use of consumer data, its business model, its finances, and its ethics (Newcomer, 2016; Romm & Bhuiyan, 2017). As a private company and investment unicorn for venture capitalists, Uber shot straight up in terms of valuation, with a promise of growing into profitability through monopolistic enterprise (Kaminska, 2016). However, as the public has gotten more and more interested in Uber and the talk of an IPO has escalated, the company has been obliged to share more of its finances and EBITDA in order to satisfy curious investors outside Silicon Valley. The result has been bewildering. As Huston (2017) notes, “if Uber Technologies Inc. had been a public company in 2016, it would have been among the top 10 biggest money losers.” Net losses of $2.8 billion on net revenue of $6.5 billion in the West with another $1 billion net loss in China for total net loss in 2016 fast approaching $4 billion. This comes on top of a valuation of $68 billion from a round of funding in mid-2016, though its nearest competitor, Lyft, is valued only at 7.5 billion USD. Uber’s EBIDTA—earnings before interest, tax, depreciation and amortization-basis—indicates, at least from what the private company has been willing...
References
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Huston, C. (2017). Uber losses would have ranked near top among public companies in 2016. Retrieved from https://www.marketwatch.com/story/uber-losses-would-have-ranked-near-top-among-public-companies-in-2016-2017-04-14
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Newcomer, E. (2016). Uber isn’t profitable in the U.S. and is on track to lose $3 billion in 2016. Retrieved from https://skift.com/2016/12/21/uber-isnt-profitable-in-the-u-s-and-is-on-track-to-lose-3-billion-in-2016/
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