It's not easy to lose a billion dollars in three months.
Of the big companies that have pulled it off, most have done something other than business as usual — perhaps they were writing down the value of a failing business unit, or booking the costs of tens of thousands of layoffs, or dealing with a giant oil spill.
But for day-to-day business operations to burn away a billion dollars in less than 100 days is something above and beyond, and for that, Uber deserves recognition.
The ride-hailing company lost $991 million in the last three months of 2015, according to figures it shared with Bloomberg News. Its total loss for all of 2016 was an equally impressive $2.8 billion.
Those losses aren't connected to a giant failed merger, or closing down a business unit, or a collapse in the price of oil. They're not caused by a once-in-a-generation financial crisis. Uber just spends way more money that it takes in.
In releasing financial information on Friday, the company is reminding investors and the public of the other side of all this — a giant business whose customers spent $20 billion on rides last year, with revenues growing much faster than losses.
“We’re fortunate to have a healthy and growing business," an Uber spokesperson told Bloomberg on Friday, "giving us the room to make the changes we know are needed on management and accountability, our culture and organization, and our relationship with drivers.”
In the modern history of the technology industry, there just aren't many companies that have done this. Microsoft posted a $3.2 billion quarterly loss in 2015, but that was because it wrote off $7.5 billion of the value of its Nokia mobile phone business. The company said that it would have had an operating profit of $6.4 billion without the massive Nokia write-down.
IBM lost over $5 billion at the end of 1992 — the largest loss in corporate history at the time, equivalent to almost $8.8 billion in today's dollars — thanks to massive restructuring and layoffs as it transitioned from being a computer maker to an IT services company. Even then, it reported only $45 million in losses from its day-to-day business operations, and by 1996 it would be regularly making $1 billion in quarterly profits.
The now-bankrupt telecommunications company Nortel lost over $20 billion in one quarter in 2001, in one of the defining moments of the dotcom crash. Even then, the company's loss from its operations was $1.6 billion, with the rest connected to one-off costs involving tens of thousands of layoffs and entire business units being abandoned.
Uber's closest relative, when it comes to losing giant amounts of money from its day-to-day business, is Amazon. Both companies have made huge losses even as the size of their business rapidly grows, and investors have celebrated each of them for it.
But even when compared to Amazon, Uber is a high-achiever in the losing-money business.
Amazon's biggest ever annual loss was back in 2000, when it lost $1.4 billion. It didn't report an annual profit until 2003, and posted annual losses of $39 million in 2012 and $241 million in 2014. Its biggest-ever quarterly loss was in 2014, when it lost $437 million in the three months from July to September.
Amazon has never come close to Uber-level losses.
And even as Amazon posted these huge losses, it was a public company whose shareholders could freely buy and sell its stock. Uber's shares are not publicly traded, and the company doesn't have to convince the market that it knows what it's doing — it just has to convince future investors. So far, they seem more than willing to keep pouring money into the company, even with limited financial information.
For the time being, Uber investors have more to worry about than just its profit and loss statements. The company has experienced a never-ending public relations crisis this year, from allegations of systemic sexism to revelations of unsavory business practices and a blockbuster lawsuit that could slam the brakes on its self-driving car efforts. In response, its CEO has promised to "grow up" and the company has announced plans to hire a chief operating officer to help him manage the company.
Matthew Zeitlin is a business reporter for BuzzFeed News and is based in New York. Zeitlin reports on Wall Street and big banks.
Contact Matthew Zeitlin at firstname.lastname@example.org.
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