Follow up on Uber

Source: Uber

Uber reported last night, and it provided more data on Uber Eats. The stock fell, mostly on slowing growth. Bookings in ride sharing weren’t that impressive, and growth at Uber Eats wasn’t enough to make up for it. Plus profits, even after taking into account stock compensation, were highly negative. It appears investors are concerned that the company is no longer in growth mode and may not be able to grow its way into profitability.

Uber Eats growth was impressive, but it also had large losses. The segment continues to lose money on an adjusted EBITDA basis, and so on a net profit basis it must REALLY be losing money. Moreover, the loss is about the same as net revenue.

We’ve gone over this before, so my conclusion is that the driver payments are too high, and it is very likely that restaurant commissions are not enough to cover that. At best, it may be because the company is still in growth mode and is paying restaurants and drivers to be part of the service. That should go away at some point. But you would think that it would go away at least for the restaurants that have been on the network for a while.

Think of it this way: you would be willing to pay for a valuable service. If Uber Eats is really offering a valuable service to restaurants and customers, they should pay for it. Right now, I am not sure they are. Or not enough. And if it isn’t enough now, when will it be enough?