Delivery courier driving his bike wearing a large green Uber Eats bag

Uber Could Post Profits for First Time

Rideshare giant Uber said it could be profitable on an adjusted basis this quarter for the first time since its inception 12 years ago. This projected milestone comes earlier than originally predicted as digital food orders through Uber Eats have skyrocketed and rideshare requests start to rebound from pandemic lows.

Over the past couple of years, Uber shares have spent billions on growing its business, but they were up almost 11% in trading on Tuesday morning following the upbeat profit announcement.

Last year, Uber and other rideshare app companies struggled to survive during COVID-19 and a shortage of drivers, since many people worked from home. However, Uber’s food delivery business, Uber Eats, flourished as more people opted to order in during quarantine. It remains to be seen whether the increase in orders will continue once the pandemic subsides.

How is Uber Becoming Profitable?

Early this week, Uber explained it was expecting adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), a profitability metric it uses, to break even in the third quarter. Whereas the company previously forecasted a loss of $100 million, it forecast between a loss of $25 million and a profit of $25 million.

Uber has faced criticism about the way it calculated its adjusted profits. As reported by Gizmodo, Uber includes an abnormally long list of exclusions when calculating their EBITDA, which Gizmodo argues isn’t a true measure of the company’s overall profitability. Regardless, Uber shareholders were thrilled with the stock closing up 11% on the forecast.

In May 2020, Uber announced that the rideshare portion of their business dropped 80%, which added to a $2.9 billion quarterly loss for the company. As a result, Uber CEO Dara Khosrowshahi laid off thousands of employees and got rid of its food delivery business in unprofitable markets to cut costs.

In the past, Uber has occasionally earned a net profit from one-time investments and business adjustments, but this truly could be the first time it turns a net profit, according to The Wall Street Journal. A report from the Financial Times from June noted that Uber’s entire losses since its start adds up to over $22 billion.

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