Uber is not out of trouble yet

Uber is not out of trouble yet

In 2023, Uber achieved a significant milestone, earning more money than it spent in an entire year for the first time. It was widely seen as a sign that the long-starved business was finally on a more sustainable path.

Today there are indications that the journey may be longer than we think.

The ridehailing and delivery company reported a surprise $654 million net loss in the first quarter of the year, as legal settlements and equity investments proved to be more of a burden on Uber's business than many expected.

In 2023, Uber achieved a significant milestone, earning more money than it spent in an entire year for the first time. It was widely seen as a sign that the long-starved business was finally on a more sustainable path.

Today there are indications that the journey may be longer than we think.

The ridehailing and delivery company reported a surprise $654 million net loss in the first quarter of the year, as legal settlements and equity investments proved to be more of a burden on Uber's business than many expected.

The company has spent billions of dollars to oppose these efforts, and although it occasionally wins, it seems to be no closer to putting the issue to rest.

The latest iteration is underway in Minneapolis, where local leaders have announced new pay legislation for Uber and Lyft drivers, leading the companies to threaten to leave the city if it passes. There is a driver classification battle going on in Massachusetts and California.

And when things look particularly dire, Uber tends to compromise — which is why the company's profitability is looking more shaky than expected. Recently, Uber agreed to end its fight with Australian taxi drivers by agreeing to pay them $178 million.

Unlike its much smaller rival Lyft, Uber is a global company, which it argues its scale gives it an advantage in the fight to bend local labor rules to its will. And although successes have been achieved, it still seems as if the fight will continue.

Uber and other gig economy companies are in the crosshairs of the Biden administration. Depending on the enforcement, this could increase the financial uncertainty revolving around the company and disrupt its plans for sustainable profits.

People don't care that Uber is more expensive. But if the company suddenly had to start paying drivers full benefits and a living wage in major markets, that desire could run out in the face of much more expensive rides or takeout orders.