Uber’s plan to turn billion-dollar losses into profits isn’t crazy

Enlarge / Uber CEO Dara Khosrowshahi in December 2019. (credit: Scott Heins/Getty Images)

Uber announced on Thursday that it lost $1.1 billion in the fourth quarter of last year. As I said last quarter, this wasn’t a surprise. After all, Uber lost $1 billion in the first quarter of 2019, a lot more than $1 billion in the second quarter (though most of it was one-time charges related to Uber’s IPO), and $1.1 billion last quarter. Uber has been burning cash at about this rate since at least 2017.

The losses might seem endless, but CEO Dara Khosrowshahi says that the end is actually in sight. The company previously said it was aiming for profitability in 2021. In a Thursday conference call with investors, Khosrowshahi said that Uber was actually on track to turn a profit even earlier: by the fourth quarter of this year.

Could Uber really reach profitability so quickly after years of 10-figure quarterly losses? Uber management has always argued that the situation was temporary—that big losses were driving Uber’s rapid growth and would turn into profits once Uber’s growth leveled out.