Uber is reaching an inflection point (and may be reaching a crisis point)

Why? According to Bloomberg:

After touting profitability in the U.S. early this year, the ride-hailing company is said to post second-quarter losses exceeding $100 million.

A main source of the losses: subsidizing Uber drivers. As Christopher Mims commented on Twitter, “So Uber is a giant machine for transferring wealth from venture capitalists to underemployed Americans”. This is both clever and something that can’t go on indefinitely. It makes clearer to me now why Uber is keen to make self driving cars work. Sure, Uber could charge more for cabs or pay cab drivers less, but in either case, they risk losing market share.

The losses this quarter certainly are an inflection point. It remains to be see if it is a crisis point. That will depend on how the VCs see this loss. I believe they will have patience and they haven’t reached a crisis point yet. Uber should hope that their investors have the same patience that Amazon’s investors have.

For the rest of the story, see: Uber Loses at Least $1.2 Billion in First Half of 2016 – Bloomberg (Image above via the Bloomberg article)

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