It’s not unusual for a new company to lose money as it seeks market share and traction, but Uber is testing investors’ patience to a degree that’s unprecedented in the history of Silicon Valley.
A December report from Bloomberg showed that the car-hailing app lost over $2.2 billion in the first nine months of 2016.
That’s a staggering sum, and leaked documents suggest that Uber’s losses have grown in scale along with the company — rather than shrinking in a way that suggests a clear path to profitability.
Uber has raised $11 billion from venture capital investors to pay the bills so far, but if losses continue at their recent pace, even that massive war chest will only last for a few more years.
Uber has been repeatedly touted as a new model for urban transportation. But if Uber never becomes profitable, that will suggest a different interpretation: that Uber hasn’t really transformed the transportation market at all.
It’s just convinced some gullible investors to subsidize a lot of peoples’ taxi rides.
There are some smart arguments on both sides of this debate, but I suspect Uber really has figured out how to make the taxi market more efficient.
However, this might not actually matter that much in the long run. The car industry is on the cusp of introducing self-driving cars.
That has the potential to totally transform the industry, and Uber is gambling that its strong position in ride-hailing will give it an equally strong position in a self-driving car market that could be a lot more lucrative.