Uber said to have lost at least $1.2 billion in 1st half of 2016

The ride-hailing giant Uber Technologies is not a public company, but every three months, dozens of shareholders get on a conference call to hear the latest details on its business performance from its head of finance, Gautam Gupta.

Last Friday, Gupta told investors that Uber’s losses mounted in the second quarter. Even in the U.S., where Uber had turned a profit during its first quarter, the company was once again losing money.

In the first quarter of this year, Uber lost about $520 million, according to people familiar with the matter. In the second quarter the losses significantly exceeded $750 million, including a roughly $100 million shortfall in the U.S., those people said.

That means Uber’s losses in the first half of 2016 totaled at least $1.27 billion.

Subsidies for Uber’s drivers are responsible for the majority of the company’s losses globally, Gupta told investors, according to people familiar with the matter. An Uber spokesman declined to comment.

“You won’t find too many technology companies that could lose this much money, this quickly,” said Aswath Damodaran, a business professor at New York University who has written skeptically of Uber’s astronomical valuation on his blog.

Bookings grew tremendously from the first quarter of this year to the second, from more than $3.8 billion to more than $5 billion. Net revenue grew about 18 percent, from about $960 million in the first quarter to about $1.1 billion in the second.

Uber’s losses and revenue have generally grown in lockstep as the company’s global ambitions have expanded. Uber has lost money quarter after quarter.

Uber, which is seven years old, has lost at least $4 billion in the history of the company.

“It’s hardly rare for companies to lose large sums of money as they try to build significant markets and battle for market share,” said Joe Grundfest, professor of law and business at Stanford. “The interesting challenge is for them to turn the corner to become profitable, cash-flow-positive entities.”

The second quarter of 2016, which ended in June, could represent a nadir for Uber. The company’s losses will likely fall.

In July, it cut a deal with its largest global competitor, Chinese ride-hailing behemoth Didi Chuxing, washing its hands of its massive losses in that country. Didi gave Uber a 17.5 percent stake in its business and a $1 billion investment in exchange for Uber’s retreat.

Uber has been engaged in a fierce price war with Lyft Inc. this year, and that has also contributed to the enormous losses. Uber told investors on Friday’s call that it’s willing to spend to maintain its market share in the U.S. The company told investors that it thinks Uber has between 84 percent and 87 percent of the market in the U.S., according to a person familiar with the matter.

Lyft said its market share in major U.S. cities is more than 20 percent and has grown substantially since last year.

This story was originally published August 25, 2016 at 5:40 PM with the headline "Uber said to have lost at least $1.2 billion in 1st half of 2016."