Uber’s CEO Dara Khosrowshahi revealed the company’s new profitability target on a conference call with investors while reporting the results for the fourth quarter of 2019. Khosrowshahi reported a loss of $1.1 billion in the last three months of the year. He explained that $243 million was due to stock-based compensation.
“We plan to achieve this profitability target assuming only modest improvements in the current competitive environment, and without the assumption of any significant changes to our current portfolio of businesses.”Dara Khosrowshahi, Uber CEO
Despite the company’s recent losses, Khosrowshahi promised that the company will become profitable at the end of 2020. His team is being pushed to adhere to this new plan. Originally, the company planned to start making a profit in 2021. “We plan to achieve this profitability target assuming only modest improvements in the current competitive environment, and without the assumption of any significant changes to our current portfolio of businesses,” Khosrowshahi said in the conference call.
Uber plans to reduce losses by focusing on ride-hailing in 2020. Uber Eats will be exiting markets in which it is not succeeding. Uber aims to generate more repeat-customer business. While working on inciting costumers to use premium ride-hailing services.
The ride-hailing giant has been operating at a loss since it entered the stock market in May 2019. In 2019, it lost $8.5 billion. Investors have been pressuring Uber to prove to them that their investments are worthwhile. They worry about the long-term sustainability of app-based ride-hailing as a business.
Over the past five years, Uber has been diversifying its business. It expanded Uber Eats globally, however, it will exit countries in which they are unable to compete. It is also developing self-driving cars, working on long-haul trucking operations and even planning commercial passenger drone shuttles.