Published: Fri, August 09, 2019
Markets | By Otis Pena

Uber shares skid as quarterly loss soars

Uber shares skid as quarterly loss soars

Uber Technologies Inc reported lower-than-expected revenue for the second quarter on Thursday, sending shares down 12% as the largest USA ride-hailing company failed to show expected benefits of easing price competition.

Uber's second-quarter net loss, widening from a loss of $878 million a year earlier, included $3.9 billion of stock-based compensation expenses related to its IPO earlier this year and almost $300 million in "driver appreciation" related to the stock sale.

Adding to that toll, Uber said it also faced rising competition in global markets and slowing growth on its core ride sharing platform, where revenue increased by only two percent. Uber's revenue for the period rose 14% to $3.1 billion.

In a statement, Uber's CEO, Dara Khosrowshahi, tried to spin the results in the most positive light possible.

It was the first of the major ride-hailing companies to go public, beating Uber to its stock market debut.

Both Uber and Lyft remain below their respective IPO prices.

"People don't like to use scooters in snow" as much as they like ride-hailing, Chief Financial Officer Brian Roberts said on a conference call with analysts.

Smaller rival Lyft Inc said on Wednesday pricing had become "more rational", meaning the company should spend less on promotions and incentives to win market share. The company wants to leverage its algorithms and routing knowledge to remove what it sees as inefficiencies in passenger transportation, something that can also apply to areas including food delivery and freight.

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The company, which has not yet made clear whether it will make a profit, is trying to convince investors that growth will come not only from its ride services, but also from other logistics and food delivery services.

Lyft shares were rallying by 8% to $65.22 in after-hours trading.

Uber has consistently said 2019 was expected to be an investment year.

Uber lost $5.24 billion U.S. in the second quarter after making huge stock-based payouts in the months following its stock market debut.

Lyft continued to bleed money in its second quarter but says it expects to stem some of those losses, raising its outlook for 2019. Uber stock initially moved lower following its report, though it was largely just eating into the gains scored earlier in the day as a Lyft sympathy play.

Although revenue for the company's Uber Eats food-delivery service rose 72% to $595 million.

Mr Khosrowshahi said the competitive environment is starting to rationalise and had been "progressively improving" since the first quarter.

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