Uber Stock Hits New All-Time Low Due To Investor Concerns About Profitability

Some analysts have criticized Uber’s direction since its former CEO Travis Kalanick resigned in 2017, due to allegations of sexism under his …

Uber (UBER) stock hit an all-time low Wednesday, as the ride-hailing company’s shares continue to slide after the company released its poor earnings statements for the second quarter last week, showing the company lost $5.2 billion.

Uber’s price of shares dipped to $33.36 — the first time the company’s stock fell below $36. By 3 p.m. ET, shares of Uber were trading at 33.94, down 6.9%.

Analysts and investors are concerned that the company may not be profitable, as it continues to research new initiatives such as Uber Air, which would weigh on profit margins. Stock compensation expenses are also a major cost for the company.

The company reportedly initiated a hiring freeze last week after the release of the poor earnings report.

Uber’s competitor, Lyft (LYFT), has released financial results that indicate a more rosy outlook, as the company had better-than-expected earnings last week. Lyft is considered a more focused company than Uber, as the company limits its services to just getting rides, and is only available in North America.

The two companies both had poor performance IPOs earlier this year. Lyft started its IPO at $72 in late March, with the stock now trading around $54 dollars. Uber had its IPO on May 10, with its pricing at $45, but dropped 7.6% on its first day of trading.

Some analysts have criticized Uber’s direction since its former CEO Travis Kalanick resigned in 2017, due to allegations of sexism under his leadership and his ties to President Donald Trump.

Uber CEO Dana Khosrowshahi struck back at critics that say the company has lost its “growth at all costs” mentality since Kalanick resigned.

“The founder mentality, that edge, that fire is absolutely something that we want to keep going at the company,” Khosrowshahi said. “It’s a big part of what made the company successful and I absolutely think that it will play a big part of making the company successful moving forward.”

Uber was founded in 2009 in San Francisco. Its services are available in over 60 countries and 400 cities worldwide.

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Uber’s top lawyer reveals how the CEO convinced him to join the company he’d previously said he …

Fast forward a few months, a Dara Khosrowshahi, who had recently taken over the helm of Uber following the ousting of founder Travis Kalanick, was …

In early 2017, Tony West, then the general counsel for Pepsi, had just finished a meeting with a member of his staff when he noticed a New York Times issue on the table of his office.

On the front page, above the fold, was a damning exposé: “Uber’s Culture of Gutsiness Under Review,” a headline read. The 1,400-word story would mark the beginning of a massive shift on Uber’s part from scrappy startup gearing for astronomical growth to a publicly traded, global entity.


The New York Times front page on that day in West’s office.
NYTimes

For West, it would catalyze a career change, one that even he wasn’t aware of at the time.

“I remember finishing that article and tossing the paper on my table and saying to say to my colleague: ‘Man, I’m glad I’m not the GC of that company, they’ve got some real problems,'” West told the New York Stock Exchange’s “Inside the ICE house” podcast, published Wednesday.

Fast forward a few months, a Dara Khosrowshahi, who had recently taken over the helm of Uber following the ousting of founder Travis Kalanick, was eagerly trying to convince West, a former federal prosecutor, to join Uber.

“What was supposed to be a thirty-minute meeting turned into an hour-long meeting,” West said. “We were talking about this incredible company which I had fallen in love with as a consumer years before. I was already someone who had it on my phone and used it all the time.”

Read more: An early Uber investor says the company’s new leaders have ‘lost their mojo’ — but can still beat Lyft in the long run

Over steak, the pair discussed “the challenges [Uber] was facing, what it would take to turn around the culture, to turn around the legal problems, to begin to unlock the enormous potential that this company had, and the fact that he needed a partner in getting that done.”

West saw it as a challenge custom-built for his skills acquired at Harvard, Stanford, the Department of Justice, and Pepsi.

“I left that meeting in a very different mind space, in terms of both thinking about what an incredible opportunity this was, and clearly the challenges the company was facing at that time, which really fit my resume,” he said.

“They needed help with regulators, I had been a regulator. They needed someone who understood the governance of a public company, I had been the GC of one of the largest public companies in the world,” he said. “And so when you put it all together, it seemed like a perfect match. The rest, as they say, is history.”

Are you an Uber employee? Have a story to share? Get in touch with this reporter at grapier@businessinsider.com Secure — and anonymous — contact methods are available here.

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An early Uber investor says the company’s new leaders have ‘lost their mojo’ — but can still beat …

CEO Dara Khosrowshahi told analysts on a conference call following the company’s second-quarter earnings report — in which it posted a massive …

Uber has transitioned from nimble startup, to a global and publicly traded company — and in doing so, the ride-hailing giant has lost some of what made it special, according to an early investor and adviser.

“They’ve lost their mojo,” Bradley Tusk, the company’s first political strategist who invested in the company in 2011, told CNBC on Monday, as shares of the company plunged to a record low price. “I understand why they made that change, but clearly there’s not a lot of confidence int he leadership.”

Read more: Uber confirms a hiring freeze in the US and Canada as the ride-hailing giant ramps up cost-cutting efforts

CEO Dara Khosrowshahi told analysts on a conference call following the company’s second-quarter earnings report — in which it posted a massive $5.2 billion loss— that the company was continuing to innovate to become profitable, especially in shared rides.

“The big picture is we want to be there any way you want to get around your city and I think we’re well on a path to do so in a profitable way,” the former Expedia executive who joined Uber in 2017, said.

Tusk seems to agree with him on that aspect, but said there’s still plenty of work to be done.

“I now understand why they wanted to stay private for so long,” he said. “Fundamentally, for the company to be profitable, it can’t just be Uber Eats, it can’t just be ridesharing. They’ve got to be that agency of transportation. So whether you’re getting yourself from point-A to point-B on a bike, scooter, car, or bus; wether its furniture being shipped on a truck, or a burrito with a messenger, they’ve got to be the default for all of that to really reach profitability.”

Most Wall Street analysts agree too. Of the 35 polled by Bloomberg, 23 have the stock rated as a “buy.” Still, shares remains under water following the company’s IPO in May, and are 39% below analysts’ average price target of $51.61.

In June, Uber’s heads of marketing and operations departed the company, followed by two board members, including ally of ousted founder Travis Kalanick, Ariana Huffington, in July.

“I think at the very least some of what Travis represented in terms of innovation and change and intensity is lacking at the company now,’ Tusk continued. “There’s got to be some world where you can not have a culture of harassment and an uncomfortable work environment and yet still be able to innovate and compete.”

But don’t let his tone imply Lyft might be a better buy.

“Lyft obviously had a less bad quarter than Uber did and so the share reflected it,” he said. “But ultimately Lyft is a US-only ride-sharing business and i think it’s really hard to achieve a big vision at the kinda valuation they want to have because of that.”

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What Uber and the Koch Brothers Have in Common: A Plan to Destroy Public Transit

Uber has hired numerous former Democratic Party campaign managers and lobbyists and the company’s CEO, Dara Khosrowshahi, has publicly …
Tuesday, Aug 13, 2019, 12:52 pm

BY Jeremy Mohler

Apparently, supplanting the taxi industry wasn’t enough. Now the corporate giants want to take out public transit. (Kike Calvo/Universal Images Group via Getty Images)

At first glance, the rideshare corporation Uber couldn’t appear more different than conservative oil-mogul billionaires Charles G. and David H. Koch. Uber has hired numerous former Democratic Party campaign managers and lobbyists and the company’s CEO, Dara Khosrowshahi, has publicly criticized the Trump administration, including over the travel ban on several majority-Muslim countries. The Kochs, meanwhile, have gained a reputation for bankrolling the Republican Party.

Yet Uber—the Silicon Valley startup-gone-public—shares at least one goal with the most prominent funders of modern conservatism: the destruction of America’s public transit.

While polarization in the United States is on the rise when it comes to metrics like party affiliation and media consumption, there’s a frightening level of agreement in corporate America, regardless of party loyalty. Examining where both Uber and the Koch brothers agree exposes the consensus hiding beneath the surface of our current political gridlock. Yes, rideshare corporations and oil tycoons share a financial interest in a car-centric future. But both also lobby for corporate tax cuts, deregulation and fewer rights and protections for workers. Both also envision a society with weakened or nonexistent public goods, part of a 40-year privatization trend that’s touched everything from public education to water access. From this vantage point, government is, in fact, getting things done and solving problems—just for corporate America rather than poor and working people.

A close look at the growing war on public transit reveals the planks of this corporate consensus.

In documents filed with the Securities and Exchange Commission, Uber’s executives claim to see a “massive market opportunity” in the estimated 4.4 trillion miles traveled each year by people using public transit across 175 countries. The company continues to heavily subsidize per-ride costs to inflate its value to investors and undercut existing options, despite bleeding billions of dollars. “Uber is effectively a middleman for a money transfer from venture-capital (VC) firms to consumers,” writes James P. Sutton in National Review. Simply put, effectively supplanting the taxi industry wasn’t enough: Uber plans on undercutting public transit to finally turn a profit.

For their part, the Koch brothers are funneling money to their political action committee (PAC), Americans for Prosperity, to kill proposed public transit projects nationwide. Last year, they led the charge in stopping a popular $5.4 billion transit plan in Nashville, Tennessee, that had even been backed by a coalition of the city’s business community. The Kochs have funded similar anti-public transit efforts in Arkansas, Arizona, Michigan, Utah and other states.

Their stated rationale, of course, is lower taxes. Americans for Prosperity tried to kill a 2017 gas-tax plan in Indiana meant to raise a billion dollars to invest in buses and infrastructure, even though it was introduced by the state’s GOP-led House of Representatives. Cutting taxes is the Koch brothers’ bread and butter. They contributed $20 million to help pass the Trump tax plan, which slashed taxes for their primary business, Koch Industries, by as much as $1.4 billion a year.

Uber has joined the Koch brothers on this libertarian crusade, using a corporate shell game to avoid paying billions in taxes and lobbying against taxes and fees on rides across the globe.

The corporate behemoths also share a stated goal of “cutting red tape.” The Koch brothers bankrolled the founding of the nation’s first libertarian think tank, the Cato Institute, which sees “limited government,” i.e., deregulation, as a key ingredient of freedom. They also funded the now-defunct Freedom Partners, which developed a road map that shaped the early days of the Trump administration’s deregulatory policy agenda. Uber, together with its main competitor Lyft, boasted more lobbyists in 2016 than Amazon, Microsoft and Walmart combined. As of June 2018, the two corporations had convinced 41 state legislatures and many local governments to pass legislation protecting them from regulation.

Most importantly, both the Koch brothers and Uber understand that their freedom depends on taking freedom away from working people. Uber has spent generously on fighting to ensure its drivers maintain their precarious status as independent contractors. The company has also invested heavily in technology that would get rid of drivers altogether, including driverless cars. The Koch brothers’ anti-worker views date back much further, all the way to the counterrevolutionary days at the end of the New Deal era. Fred Koch, Charles and David’s father, owned an oil refinery corporation and was active in the archconservative John Birch Society. Through groups like the National Right to Work Legal Defense Foundation, the Kochs have long led the attack against collective bargaining rights for public employees, including train and bus drivers.

At the end of the day, the Koch Brothers and Uber are much like Coke and Pepsi. They may have clashing styles, but their product is largely the same: lower corporate taxes, deregulation, lower wages, and private control over public goods like mass transit.

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5 things to know before the stock market opens August 13, 2019

Shares of Uber, just months after their NYSE debut, hit an all-time low Dara Khosrowshahi, chief executive officer of Uber Technologies Inc., speaks …

Article summary

5 things to know before the stock market opens Tuesday Published Moments Ago 1. Dow could see a 3-session slide, sinking further from July’s all-time highs Traders on the floor of the New York Stock Exchange. U.S. stock futures were pointing to a lower open on Wall Street on Tuesday, a day after the Dow Jones Industrial Average , S&P 500 and Nasdaq declined for the second straight session. Investors continued to pile into bonds, pushing yields inversely lower on concerns about the U.S. An inversion, which happens when shorter-term rates move higher than longer-term ones, has historically been a reliable recession signal.

Hong Kong protests close the airport for second day as China warns demonstrators Protesters occupy the departure hall of the Hong Kong International Airport during a demonstration on August 13, 2019 in Hong Kong, China. The talks are ongoing, and nothing has been finalized, people familiar with the matter told CNBC on Monday. Shares of Uber, just months after their NYSE debut, hit an all-time low Dara Khosrowshahi, chief executive officer of Uber Technologies Inc., speaks during an interview in Tokyo, Japan, on Wednesday, July 3, 2019. The stock, still reeling from last week’s massive second-quarter loss, dropped 7.6% to $37.

Since its New York Stock Exchange debut in May, Uber has declined about 18% from its initial public offering price of $45 per share. On Monday, early Uber investor Bradley Tusk told CNBC that CEO Dara Khosrowshahi lacks the «ruthless innovation» mentality of the company’s early days that turned it into a global phenomenon, and the stock reflects it.

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