Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Market Insanity

Uber might lose $5.5 Billion in 2016

Uber Technologies Inc. is on track to lose $5.5 billion in 2016, an anonymous source told Bloomberg Technology. If that prediction is accurate Uber’s losses will exceed its revenues by $1.74 billion.

The ride-hailing app provider generated $3.76 billion in net revenue but spent $5.5 billion, Bloomberg Technology reported. The same source claimed that Uber lost more than $800 million during the third quarter of 2016.

Disturbingly those figures do not include the money Uber lost on its Chinese operation. The company decided to exit the People’s Republic because it was unable to compete with a homegrown rival called Didi there.

How Much Money is Uber Making?

Unfortunately there is no way to verify these figures because Uber is a privately-held company. That means it has no obligation to release its financial data to anybody and refuses to do so. These figures must be regarded as unsubstantiated hearsay because their source has not been identified.

Although there are some strong indications they are real because Uber has not challenged them. There was also some good news in the leaked numbers.

They indicate Uber’s revenues increased during the year; rising from $960 million in the first quarter, to $1.1 billion in the second quarter and $1.7 billion in the third quarter. Uber might have leaked these in order to show potential investors that its revenues are growing.

Losses are Piling Up at Uber

Despite that losses are piling up at Uber, it lost $100 million in its home market, the USA during the second quarter. Losses also rose from $580 million the first quarter to $800 million the second quarter.

Uber’s total losses for 2015 were $2 billion meaning losses might increase by $3.3 billion in one year. At that rate one wonders how Uber can survive despite its reputed valuation of $69 billion. We have to wonder if that number is real, and how long Uber can finance experiments like self-driving cars and autonomous trucks.

A major problem that Uber faces is that it lacks a deep-pocketed corporate benefactor like its’ archrival Lyft has. General Motors (NYSE: GM) invested $500 million in Lyft in January and tried to buy the ride-hailing app in August.


Currently Uber seems to be operating on the good will of venture capitalists and investment bankers. If that were to disappear, Uber would be sunk, unless of course it borrows so much money investment banks would have to step in and save it to protect their investment. Strangely enough that might be Travis Kalanick’s plan; he could be betting that Golden Sachs (NYSE: GS) will bail Uber out at some point.

Another possibility is that Uber will simply end up selling out to a large technology or auto company; potentially Ford (NYSE: F), which certainly has the cash to buy Uber if it wanted. My prediction is that after year or two of losses Uber will sell out to an automaker or investment bank, there is no way it can survive if Bloomberg’s report is true.