Going Over Uber Technologies’ Surge of the Week

Regardless of how much of a presence Uber Technologies (NYSE:UBER) has had over the years, it has never truly stood up as a company capable of generating a decent profit. It had recently predicted a loss of roughly $100 million, which was meant to occur around these dates. 

Surprisingly, that was not even close to what happened today.

By Friday the 24th’s closing hours, Uber managed to fit its third-quarter profits into a new range. By the end of September the 30th, Uber will have generated something in-between a loss of $25 million and a profit of $25 million. 

Compared to its earliest predictions, that comes as a significant shift. But what does it all mean for the business? Will it be able to become profitable once and for all?

Why did this happen?

Even if Uber’s primary business model is in their transportation services, their delivery business happens to generate the most revenue. With a pandemic at hand, the latter has gone through significant growth over time.

For further reference, their delivery services have represented over 54% of its total revenue over the past nine months. In retrospect, this comes as an excellent explanation for why Uber went through such a sudden change.

When talking about this, Uber said that a series of “better-than-expected gains” have helped cover all of their operations’ necessary expenses. They also shared that they’re more than hopeful that this improved outlook could carry over to the following quarters.

Can Uber actually maintain this streak?

Sadly, everything seems to the point that this specific improvement will only be short-lived. Regardless of how well Uber is performing today, it still has many struggles to face along the way.

For instance, many states are now imposing new regulations for delivery services. This goes from shifting the way its tax returns have to be reported from now on to establishing capping fees that will limit how much they’ll be able to charge to restaurants. 

As expected, these are the sorts of changes that will require Uber to raise its operating costs. Nonetheless, a fact remains, Uber did manage to decrease its losses by a long shot.

In essence, we believe that this could be a sign of Uber being on a better path. It might not turn profitable any time soon, but it is definitely on a road that could make it a reality some time in the distant future. And for that, we’ll have to wait a little longer.