Answer:
Step-by-step explanation:
Uber is not yet profitable. It seems in the case of today’s tech companies, profit takes a back seat to market share and growth in top line revenue.
In some markets, like San Francisco, they claim they are profitable, but no one has actually seen the numbers. And those that have seen the numbers (the investors) and have been willing to talk off the record, refute Uber’s claims of profitability in San Francisco. By allocating costs to other markets, Uber can make it appear that San Francisco is profitable when it is not.
Uber often pays drivers more than the passenger paid for the ride via bonuses, boosts, and power driver rewards. And they often discount the rides to large business customers or new customers. but absorb the discount themselves, paying the driver full price.
They also pay hundreds of dollars in referral fees to drivers who can recruit new drivers. Plus the new driver gets hundreds in sign on bonuses after completing a certain number of trips.
Uber constantly needs a steady stream of new drivers, due to both expansion of the service (as more customers discover Uber) as well as attrition (to replace drivers who have found better paying jobs in an improving economy or have figured out that after expenses, driving for Uber is just not very profitable).
Then add in the huge numbers of software developers, data analysts and managers that Uber employs. Not to mention their large staff of lawyers. It is also rumored that Uber pays bribes or “campaign contributions” to public officials to keep them from legislating against Uber. And Uber is being sued often. Uber will do anything and spend any amount to make sure their drivers never become employees, even if they are de facto employees now.
They have large expenses for advertising and marketing, more for getting new drivers than for advertising for new customers.