Uber Technologies Inc., the popular love-to-hate ride-hailing company, made two major announcements this week.
New Retirement Plans
On Wednesday, Uber said it would be partnering with Betterment, an online investment and wealth management company, in order to provide one year of automated investment management advice for drivers living in Boston, Chicago, Seattle, and the state of New Jersey.
Drivers can open either an IRA (individual retirement account) or a Roth IRA for free during the first year. After this time period, users who have a balance of less than $100,000 will pay an annual fee of 0.25% of the average annual account.
Uber hopes this program will encourage its roughly 600,000 U.S.-based drivers to begin saving for their retirement. “Nearly one–third of Americans have no retirement savings or pension. And research consistently shows that when people have access to a retirement account, they’re more likely to save than not,” said the company’s regional general manager Rachel Holt wrote in a blog post.
This announcement comes in the midst of a legal battle regarding its drivers’ status as employees or independent contractors. It also comes soon after a San Francisco judge rejected a $100 million settlement Uber had reached with its drivers in San Francisco and Massachusetts over employment categorization. U.S. District Judge Edward Chen agreed with some drivers’ claims that the settlement was unfair.
Uber told TechCrunch that “it designed the retirement savings feature based on driver feedback.”
While Uber still views its drivers as independent contractors, its partnership with Betterment gives the impression that the ride-hailing giant is taking subtle steps in working with, instead of against, its drivers.
How Much Money Has Uber Lost?
According to Bloomberg, who cites people familiar with the matter, Uber has lost over $1.2 billion during the first half of 2016. When the company’s finance head Gautam Gupta held a conference call with investors, it was learned that Uber lost $520 million (before interest, taxes, depreciation, and amortization) in the first quarter of 2016. And in the second quarter, the company lost $750 million.
Gupta said that subsidies for Uber’s drivers are the main reason for the company’s losses on a global scale, Bloomberg noted. But other things certainly must have played a role, including its long battle with China’s ride-sharing giant Didi Chuxing—Uber China merged with Didi earlier in August for $35 billion—and its contentious relationship with chief U.S. rival Lyft.
These losses aren’t new for Uber, as the company lost at least $2 billion in 2015; however, its revenue grew 18% from the first quarter to the second quarter, or from roughly $960 million to $1.1 billion. Compared to the same period in 2015, Uber’s revenue only increased from $287.3 million to $375.9 million, Bloomberg reports. This shows that while the company loses staggering amounts of money, Uber has the ability to both bring in and impressively grow its revenue.
For more information in Uber, check out these Zacks articles: “Will Uber Be the Hottest IPO of 2016?” and “Forget Lawsuits, Uber Drivers’ Days Are Numbered.”
Interested in the other top stories of the week? Listen to Zacks Friday Finish Line to catch up on the week’s financial and investment news.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Image: Bigstock
Uber's Busy Week: Retirement Plans, Lost $1.2 Billion in First Half of 2016
Uber Technologies Inc., the popular love-to-hate ride-hailing company, made two major announcements this week.
New Retirement Plans
On Wednesday, Uber said it would be partnering with Betterment, an online investment and wealth management company, in order to provide one year of automated investment management advice for drivers living in Boston, Chicago, Seattle, and the state of New Jersey.
Drivers can open either an IRA (individual retirement account) or a Roth IRA for free during the first year. After this time period, users who have a balance of less than $100,000 will pay an annual fee of 0.25% of the average annual account.
Uber hopes this program will encourage its roughly 600,000 U.S.-based drivers to begin saving for their retirement. “Nearly one–third of Americans have no retirement savings or pension. And research consistently shows that when people have access to a retirement account, they’re more likely to save than not,” said the company’s regional general manager Rachel Holt wrote in a blog post.
This announcement comes in the midst of a legal battle regarding its drivers’ status as employees or independent contractors. It also comes soon after a San Francisco judge rejected a $100 million settlement Uber had reached with its drivers in San Francisco and Massachusetts over employment categorization. U.S. District Judge Edward Chen agreed with some drivers’ claims that the settlement was unfair.
Uber told TechCrunch that “it designed the retirement savings feature based on driver feedback.”
While Uber still views its drivers as independent contractors, its partnership with Betterment gives the impression that the ride-hailing giant is taking subtle steps in working with, instead of against, its drivers.
How Much Money Has Uber Lost?
According to Bloomberg, who cites people familiar with the matter, Uber has lost over $1.2 billion during the first half of 2016. When the company’s finance head Gautam Gupta held a conference call with investors, it was learned that Uber lost $520 million (before interest, taxes, depreciation, and amortization) in the first quarter of 2016. And in the second quarter, the company lost $750 million.
Gupta said that subsidies for Uber’s drivers are the main reason for the company’s losses on a global scale, Bloomberg noted. But other things certainly must have played a role, including its long battle with China’s ride-sharing giant Didi Chuxing—Uber China merged with Didi earlier in August for $35 billion—and its contentious relationship with chief U.S. rival Lyft.
These losses aren’t new for Uber, as the company lost at least $2 billion in 2015; however, its revenue grew 18% from the first quarter to the second quarter, or from roughly $960 million to $1.1 billion. Compared to the same period in 2015, Uber’s revenue only increased from $287.3 million to $375.9 million, Bloomberg reports. This shows that while the company loses staggering amounts of money, Uber has the ability to both bring in and impressively grow its revenue.
For more information in Uber, check out these Zacks articles: “Will Uber Be the Hottest IPO of 2016?” and “Forget Lawsuits, Uber Drivers’ Days Are Numbered.”
Interested in the other top stories of the week? Listen to Zacks Friday Finish Line to catch up on the week’s financial and investment news.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>