THE LEX COLUMN: Uber expansion trumps cost-cutting
Dara Khosrowshahi wants to convince the world that there are two Ubers. One, the original bruiser, losing more than $1bn each quarter to protect its market in ride shares and food delivery while going after new areas such as helicopter rides, online groceries and fintech. The other, a careful, regulation-respecting, expense-cutting business that abandons cities where the return on investment is too low, going over “every single P&L [profit and loss] item” in a bid to trim losses.
Third-quarter earnings show efforts to reconcile the two sides of the business have not resulted in much success. Uber thinks it can achieve a version of profitability and reach positive earnings before interest, taxes, depreciation and amortisation (ebitda) on an adjusted basis by 2021. This, of course, will depend on the adjustments. Uber’s business is still far from financially sustainable.