Uber, the ride-hailing company, recorded a drop of about 4% in shares after trading hours on Thursday after a third-quarter revenue report showed that the company fell short of Wall Street’s expectations. The shares picked up after the CEO of Uber, Dara Khosrowshahi revealed that the company’s major ride-hailing service will most likely resume fully after being affected by the COVID-19 pandemic, BBC reports.
In total during the third quarter, Uber lost $1.09 billion on a GAAP basis slightly better than last year’s loss of $1.16 billion. Income from Uber’s ride-hailing business reduced by 52% with the business raking in $1.37 billion while income from Uber’s delivery services including Uber Eats increased by 190% raking in $1.14 billion. Drivers’ incentives, referral payments, and reimbursement for COVID-19 safety kits were are not added to the company’s total revenue.
Using the EBITDA basis, Uber predicts that the company will record profits and not losses by the end of 2021.
Khosrowshahi explained that the past 8 months have been difficult ones for Uber but that the company is observing some signs and is being hopeful that’s the company’s major business- ride-hailing service, new soon pickup. The CEO stated that its riding-hailing service has recorded significant improvement in 11 out of its 15 major markets in the United States. Riding-hailing services are resuming fully in New York City Atlanta and Chicago according to the CEO, CNBC reports.
The CEO also explained that they are being optimistic because Uber rides are recovering faster than other transportation services including trains and buses in several cities as well as taxis in New York City. The company’s policy of no-mask-no-ride also assuring drivers of their safety and they are gradually coming back according to Khosrowshahi.
The company’s shares had initially recorded a drastic increase on Wednesday after a proposed ballot measure, Proposition 22, was supported by voters in California. The measure will absolve Uber and other ride-hailing companies such as Lyft, DoorDash, and Instacart of the responsibilities of their drivers. The drivers will be seen as independent contractors as such, the companies will not give them full benefits such as paid sick days, healthcare, unemployment insurance, and others.
Uber Eats, the company’s food delivery business has recorded a drastic increase in revenue as people turn towards restaurant takeaways and online grocery orders during the pandemic. Uber announced that the income from Uber Eats reached an all-time high of $1.4 billion in 3 months, about a 124% increase of what was recorded during the same period in 2019. The revenue from Uber Eats helped to cushion the effects of the declining ride-hailing business.
Khosrowshahi said that the business is showing a lot of promise as it continues to boom even as the lockdown is being lifted in many countries across the world.