How Uber’s Losses Compare With Amazon’s Losses In Its Early Years

Ride-hailing major Uber (NYSE:UBER) indicated that it wants to be the “Amazon of transportation,” targeting a wide range of transportation services. In this analysis, we take a look at how Uber’s financials and losses compared with Amazon’s in its early years. While Uber was founded in 2009, we have financials available from 2014, five years post inception. As Amazon was founded in 1994, we use financial data starting from 1999 for the purpose of this comparison.

View our interactive dashboard analysis How Do Uber’s Losses Compare With Amazon’s Losses In Its Early Years?

While Amazon And Uber Posted Operating Losses Of ~$600 Million 5 Years Post Founding, Uber’s Losses Widened To $3 Billion, While Amazon Turned Around Its Operations

• Amazon’s losses have been smaller in magnitude compared to Uber’s, and the company turned profitable, on an operating basis in 2002, about 8 years after it was founded.
• Uber has been posting over $3 billion in operating losses over the last 3 years, given its high costs and mounting competition.

Amazon Reported A Net Profit About 10 Years Into Its Founding (2004), While Uber Continues To Post Deep Losses

Uber Has Been Posting Higher Levels Of Revenue Growth Compared To Amazon’s In Its Early Years

Uber’s P/S Multiple Stood At Over 4x In 2018. At A Similar Stage, Amazon’s P/S Stood At About 3.8x

Conclusion

• While Amazon was able to achieve some level of profitability about a decade into its founding, profitability remains elusive for Uber, on account of its high costs and the intense competition in the ride-sharing market.
• Moreover, Amazon posted losses as it focused on building a moat by investing in technology, warehousing, and delivery infrastructure in its early years.
• On the other hand, Uber has been spending vast sums on courting and retaining drivers and riders leading to its heavy losses. It’s unclear whether these investments will translate into long-term loyalty/ an economic moat for the company.

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