The world's most valuable private company may lose $3 billion in 2016

folarin okunola

December 22, 2016 3:43 PM

The ride-hailing leader is expected to surpass the $5.5 billion net revenue mark in 2016.

Uber CEO Travis Kalanick.

Uber is reportedly on track to lose $3 billion this year, up from $2.2 billion in 2015, according to multiple reports from The Information and others.

It may sound weird to hear that Uber is operating so far from profitability in a period when it feels like it's become an established mainstream brand with global presence.

The ride-hailing leader is expected to surpass the $5.5 billion net revenue mark in 2016, per a Bloomberg report, up from an estimated $2 billion in revenue in 2015.

While that kind of growth is usually very impressive, the $3 billion in expected losses means Uber is spending about $1.55 for each dollar it makes.

Techcrunch reports that an Uber spokesperson said the company does not comment on its finances.

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Uber has been spending a lot of money on developing self-driving cars, growing its food delivery business, paying driver and employees, and settling a lot of lawsuits and lobbying.

The company has also spent a lot of money developing its map technology so it will no longer need to rely on outside partners like Google for its navigation systems and location data.

Uber also made a lot of strategic acquisitions this year, acquiring AI startup Geometric Intelligence, and self-driving truck startup Otto, as it continues to strive to become a leader in autonomous vehicles and logistics.

The world's most valuable private company also backed off its efforts to compete in China, merging its business with that of Didi Chuxing, its strongest regional competitor, in exchange for a stake in the resulting entity.

That meant fewer trips for Uber globally but also freed it up to focus on expanding its UberEATS food delivery service, which now has presence in 50 cities worldwide (including South Africa), and not only develop but also test self-driving cars.

Industry insiders, according to Techcrunch, believe Uber is still spending wisely on the ridesharing aspect of its business, something that could mean its investors will still continue to support its business efforts.

folarin okunola