🔒 Uber’s lacklustre results should hurt its IPO, but will they?

By Felicity Duncan

Uber released its results this weak and they weren’t great. Its sales growth fell and its loss for the quarter widened to over $1 billion, bringing its year-to-date losses to over $2.5 billion. Yet, in the face of the company’s massive cash burn and inability to make a profit, investment banks reportedly are still valuing it at $120 billion ahead of its planned IPO.

Uber’s business model has a number of weaknesses, but surely one of the largest is that it is currently subsidizing every ride its passengers take (while, somehow, still underpaying its drivers so that they usually quit bothering after a few months). To succeed in the long term, a company really does need to earn more than it spends. I understand why investors are excited about a company that has become a de facto verb (“Let’s Uber there, I don’t want to walk”), but even with the glamour of Uber’s innovation, surely at least some investors must be asking how the company is going to make money?
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