Uber stock fell about 9% today, add that to yesterday’s loss and the total drop comes to about 37% from its $45 IPO price. The online taxi company also underwent a market cap loss from about $79 billion in June to about $48 billion today. It’s taxi rival Lyft has also been going through turbulent times ever since it went public.
The ride-hailing firm on Monday posted positive results that signaled a company whose fortunes may soon change. But despite that, its stocks have been dwindling.
Uber’s third-quarter loss amounted to $0.68 per share, an improvement from Yahoo’s predicted $0.81 loss per share. The revenue figures also beat the estimates by analysts after recording $3.81 billion for the third quarter, compared to the forecasted $3.69 billion. This quarter’s revenue also represented a 30% jump from last year’s revenues for the same period.
In terms of losses, Uber registered a $1.16 billion loss during this quarter, down from last quarter’s $5.2 billion. However, the loss was still far much bigger compared to $986 million recorded a year earlier. According to Uber’s EBITDA forecasts, the company plans to start making profits in 2021, but the used measure doesn’t take all costs into account.
Ever since its Wall Street debut in May this year, the company has been facing a series of internal shakeups. The firm laid off nearly 5% of its entire workforce, with two rounds of layoffs happening in the third quarter alone. Additionally, three board members also exited the company including its Chief Operations Officer, Chief Marketing Officer, and serial entrepreneur Arianna Huffington.
But Uber isn’t just facing challenges internally. Business hasn’t been all rosy in its two major markets, London and New York. In New York, Uber went to court in September accusing the city of implementing traffic regulations that hampered its business operations. London, on the other hand, only handed the taxi company a two-month operating license even as it hoped to receive a five-year operating consent.
Both Uber and its rival Lyft are facing yet another challenge in their home state, California.
In legislation signed in September by Governor Gavin Newsom, companies that use independent contractors are now required to reclassify them as employees. Uber and Lyft happen to be in this category since their drivers are classified as independent contractors. Prior to that, their drivers criticized the company’s decision to treat them as independent contractors saying the model was unfair to them.
But according to Uber and Lyft, the success of their companies largely depends on the drivers remaining independent contractors and not employees.