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Cash Rich Uber Reds $200 Million a Month in 1H 2016

Losses are nothing coz Cash is King. Since it’s inception 7 years ago Uber has burnt $4 billion in losses which is not alarming to its investors as Uber is valued at $69 billion, $8 billion cash in the bank and $3.2 billion credit facilities.

On Friday, Gautam Gupta, head of finance told investors that Uber’s losses mounted in the second quarter. Even in the U.S., where Uber had turned a profit during its first quarter, the company was once again losing money.

1Q 2016, Uber lost about $520 million before interest, taxes, depreciation and amortization.

2Q 2016 the losses significantly exceeded $750 million, including a roughly $100 million shortfall in the U.S.

1H 2016  Uber’s losses in the first half of 2016 totaled at least $1.27 billion.

Bookings grew from $3.8 billion in 1Q to more than $5 billion in 2Q.

Net revenue grew about 18 percent, from $960 million in 1Q to $1.1 billion in Q2.

Subsidies for Uber’s drivers are responsible for the majority of the company’s losses globally, Gupta told investors, according to people familiar with the matter.

Uber also told investors during the call that it was changing how it calculates UberPool’s contribution to revenue in the second quarter, which had the effect of artificially increasing revenue.

In 2015, Uber lost at least $2 billion before interest, taxes, depreciation and amortization.

Uber, which is seven years old, has lost at least $4 billion in the history of the company.

The company’s losses will likely fall. In July, it cut a deal with its largest global competitor, Chinese ride-hailing behemoth Didi Chuxing, washing its hands of its massive losses in that country. Didi gave Uber a 17.5 percent stake in its business and a $1 billion investment in exchange for Uber’s retreat. Uber lost at least $2 billion in two years in China.

Uber’s backers range from venture capital firms like Benchmark Capital to the investment bank Goldman Sachs. Altogether, Uber has raised more than $16 billion in cash and debt. Its latest valuation is a whopping $69 billion.

Uber has about $8 billion in the bank and will soon receive $1 billion in cash from Didi, according to a person familiar with the matter. Uber also has access to a $2 billion credit line and a $1.2 billion loan.

The company has effectively redistributed at least $1 billion to the Chinese working class in the form of heavy subsidies to drivers there. 

One investor said that he was expecting Uber to continue losing money in the U.S. for the next quarter or two.

Full article published on Bloomberg

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