Huge spending on driver rewards dragged down Uber’s performance

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Uber Technology Company Update

The huge spending on incentives to address the driver shortage has put pressure on Uber’s ride-sharing business and dragged down its overall performance as it continues to deal with the effects of the pandemic.

Uber’s adjusted earnings before interest, taxes, depreciation and amortization-the company’s preferred indicator of the health of its underlying business-is far below analysts’ forecasts.

The company’s stock price fell more than 7% in after-hours trading.

Between April and June, Uber announced an adjusted ebitda loss of US$509 million, an increase of US$328 million over the same period last year, but it was lower than Wall Street’s expected loss of US$325 million.

The company’s ride rate—the share of each trip—is 18.7%. According to FactSet’s data, analysts had expected it to exceed 20%.

Uber CEO Dara Khosrowshahi said: “In the second quarter, we invested in drivers to invest in recovery and made strong progress. The number of monthly active drivers and couriers in the United States Almost 420,000 people were added in July.”

Expecting a reduction in incentive spending, the company reiterated its goal of publishing a quarterly positive ebitda before the end of the year. Lyft, its biggest competitor in the North American market, achieved this milestone on Tuesday, three months ahead of its own guidance.

Uber’s investment in China’s Didi and autonomous driving technology company Aurora helped the ride-sharing group achieve its first quarterly profit after listing.

According to data released on Wednesday, Uber reported a net income of $1.1 billion in the second quarter, which was attributed to the previously unrealized gains of the two companies.

However, Didi’s value was calculated when it went public at the end of June, and then its share price plummeted Beijing’s privacy crackdown, Making future reassessment possible.

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