Following its second-quarter report where Uber disclosed that the popular ride-hailing service had charted record losses after their IPO in May, Uber’s stocks continue on a downward slope and close Monday with almost record low.
UBER, -6.67% Shares – which sold for $45 in a May initial public offering – were off nearly 7% at $37.27 around midday Monday. This value tails its record low on May 13, which is at $37.10 when its chief executive sent an email to employees stressing that Uber’s long-term value would eventually be realized.
Last Friday, Uber made a bold move by instituting a “hiring freeze” where the company has decided not to hire any new employees following the massive $5 billion Q2 losses. The company was reportedly emailing candidates and applicants regarding the hiring freeze and to cancel their upcoming scheduled interview. However, the company confirmed that it was freezing hiring for engineering and product-manager roles, but not for positions in freight or autonomous driving.
The company’s UBER -6.42% most significant loss, equal to $4.72 a share, included $3.9 billion in stock-based compensation expenses related to its May IPO. Revenue improved 14% to $3.17 billion. Analysts had estimated a loss of $2.03 a share on revenue of $3.3 billion.
For this fiscal year, the company has already lost at least $6 billion so far, and the future isn’t as bright as they hope it to be, driving analysts to cast doubts on Uber and its market potential after the company introduced its shares to the market a few months ago.
“What Uber has yet to prove is if the cost of the ride can cover the operating expenses,” Beth Kindig, a technology analyst in San Francisco said in an interview. “I don’t like the price war narrative. What we know is that gross bookings are growing, but revenue is in the low double digits while losses are accelerating due to subsidizing rides.”