Uber Technologies, one of the leading global transportation technology corporations worldwide, made $1.75 billion US dollars in adjusted net earnings from April to June of 2017. This figure increased 17% from the previous period. The ride-sharing giant trimmed losses by nine percent to roughly $645 million.
Uber is making significant strides despite recent failures and setbacks in growing its business. It appears the company which operates in 633 urban hubs worldwide will earn more in selling a massive building in Oakland (California), which it owns, instead of selling rides during the last ten months. The original plan was to relocate Uber's 3,000 employees in this locality but it never materialized.
Management is now looking for a taker of this edifice, and the CIM Group, a real estate investment company in Los Angeles, seems to be the lucky buyer. Uber purchased the 380,000 square-feet building in 2015 for a whopping $123.5 million. It's more like of modified home warranty.
Diversification into Real Estate
Uber has not been profitable as the corporation revealed that it lost $645 million during the second quarter of this year. The transportation conglomerate earned approximately $20 billion worth of rides in 2016 not including the subsidiary in China which it sold in July of that year.
Uber's total revenue reached $6.5 billion, and yet, it still gave up $2.8 billion the same year.
In short, the $96 million Uber is getting from disposing of its Oakland asset promises higher ROI for the short-term than the company's principal business. The corporation might as well go into the home improvement enterprise.
In fact, there are many financially-rewarding home improvement businesses as featured by the prestigious Forbes online publication.
What Do These Losses Mean?
Going back to the discourse on Uber, the company's losses do not mean it will go out of business and become bankrupt. Amazon.com, for one, failed to reach substantial profits for 20 years before emerging as the number one e-commerce domain globally with reported net revenue of $135.99 billion in 2016 which is an increase from $107.01 in 2015.
Robust Financial Position
Uber might not be intent on the property or home renovation business. Insiders say the enterprise left Oakland to solidify its financial standing. It looks like a brilliant idea considering that Uber was faced rough sailing during the past year. The turmoil included the ouster of the corporation's founder and chief executive officer, Travis Kalanick as well as the accusation made by a former Uber engineer regarding the culture of widespread sexual harassment and chauvinism the company practices.
The case that Alphabet, a parent company of Google, filed against Uber added to this unfortunate scenario.
The lawsuit cost Uber Technologies over $2 billion. Then, selling the Oakland property might have come at the right time. Of course, the city suffered financial disadvantage losing Uber which could have brought more jobs and reenergized the local economy by a mile. This scenario’s a likelihood considering that around 200 urban centers in the United States are jostling for position in courting the new head office of Amazon. Some people were apprehensive that Uber's transfer to Oakland could result in rising housing costs, displacement and gentrification. The latter is the technique of refurbishing a home or entire district so that it will conform to the standard style of living.
Some residents argued technology growth in San Francisco became less responsive after Uber made the disclosure it was selling the Oakland property. Nonetheless, the company did not abandon Oakland entirely as the ride provider still operates in the city and is said to be leasing part of the space it is selling. For the meantime, Uber needs to make some right business decisions immediately.
