- Uber reported a loss of $1.03 billion in Q1 2019; analysts see public-private transportation partnerships as a profitable option
- Uber posted 41 percent YOY growth in gross bookings in Q1 2019 at constant currency, excluding the impact of divested operations
- Offering public-transportation substitute services may be the solution to the “first mile, last mile” problem
Uber Technologies Inc. (NYSE: UBER) posted an operating loss exceeding $1 billion for its Q1 2019 (http://nnw.fm/j7q2V), the three months ended March 31, 2019. The loss represents a 116 percent decline from its $478 million loss during the same period in 2018. One potentially profitable option ahead is replacing public transportation in public/private partnerships, according to an opinion article in The New York Times (http://nnw.fm/m8xHs). To begin that strategic move, the company would offer substitute services that fill in public-transit gaps.
Uber posted revenue of $3.1 billion for Q1 2019, marking a 20 percent increase from the $2.6 billion that it recorded for the same period of the prior year. The global ride-hailing company reported 41 percent growth in gross bookings in Q1 2019 at a constant currency calculation, excluding 2018 divested operations.
The company showed Q1 growth but hemorrhaged operating losses. An analysis by website Ars Technica says that Uber has lost money almost every quarter since its founding. A price war with competitor Lyft has lowered price points to an unsustainable level, the report said. The site asserts that self-driving cars may, in the future, lower Uber’s cost of doing business. It adds that revenue growth in Uber’s latest quarter is driven by the rapid growth of the Uber Eats delivery service (http://nnw.fm/k4s5Y).
According to the analyst’s opinion article in The New York Times, Uber’s strategy is to supplant public transportation initially by solving the “first mile, last mile” problem of getting riders from home locations to train stations or bus stops. Uber would initially fill this gap in public transit and then seek to replace public transportation, the article says.
“At Uber’s apex of candor, in documents filed with the Securities and Exchange Commission (SEC), it identifies a ‘massive market opportunity’ in the estimated 4.4 trillion miles traveled by people on public transit in 175 countries in 2017,” The New York Times article states.
Public-private partnerships are already being tested by Uber (and its competitor, Lyft) through apps. In Denver, the article reported, an Uber app has been integrated alongside the public-bus and commuter-rail system. In Tampa-St. Petersburg, Florida, the local transportation authority offers discounted $1 Uber trips for a reasonable distance between a passenger’s bus stop and final destination. Taxpayers subsidize the real cost of those rides.
Uber and Lyft hope that these models of public/private partnerships in sufficient quantity will become profit centers in the future. The opinion article, however, stressed that, while the United States needs more convenient public transportation, the Uber and Lyft strategies could reduce the number of persons using public transport, thereby reducing support for this service.
The article also criticized the pollution and congestion that these ride-hailing services could present if they replaced public transportation, and it further cited the services’ lack of accountability. “They look at their users as customers, not constituents,” The New York Times piece added.
For more information, visit the company’s website at www.Uber.com
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