Uber puts brakes on growth at any cost strategy and investors will be happy

International News
Uber Technologies Inc seems to have decided to stop chasing stupid growth. This is exactly what investors wanted, yet the company’s latest results, announced on Monday, show how far Uber has to go to be sustainable and rational.
In the third quarter, the total value of Uber rides, restaurant meal deliveries and other transactions increased 29% from a year earlier — the slowest rate of increase since Uber began reporting that figure. The total figure of $16.5 billion was also a little short of analysts’ expectations, as was the growth in average monthly customers using Uber services at least once. That most likely contributed to the after-market decline in Uber shares.
What Uber seems to be doing is precisely what investors want now. The company is trying to stop growing where it doesn’t make sense. Third-quarter revenue from rides, excluding what Uber classifies as excessive driver incentives and driver referrals, increased 23% in the quarter, rebounding from a growth slowdown. The adjusted revenue growth for Uber Eats, the restaurant delivery service, also accelerated.
The divergence between slowing growth in total transactions and a faster pace of revenue in crucial segments suggests that Uber has increased consumer prices, reduced incentives or made other tweaks to keep more revenue from each ride or food delivery — even if that means some people are turned off enough not to use Uber at all. This is rational, yes, but acting like a sensible company may also crimp Uber’s eventual size and ambition.
Uber also said it’s aiming to have positive adjusted earnings before interest, taxes, depreciation and amortisation in 2021. That is far earlier than analysts have expected Uber to be profitable — or profitable-ish. Lyft made a similar pledge last month to be in the green by the end of 2021 on a massaged profit number that excludes stock compensation and some other costs.
It’s useful to step back and see how much has changed for Uber, Lyft and other young and richly-valued companies. Ever since these companies went public in the first half of this year, Uber and Lyft have been forced to shift gears and chase profits, or some semblance of them, rather than boasting about how big they can grow if they swallow more of people’s current spending on transportation.

This is the new normal for young companies like Uber: Investors want them to grow, but not if the growth is achieved with unsustainable spending or rash financial trade-offs. There in the penalty box is WeWork, the office leasing startup that did exactly that.READ MORE

US labour agency says Uber drivers are 'contractors', not employees

Company News

Drivers for ride-hailing company Uber Technologies Inc are independent contractors and not employees, the general counsel of a US labor agency has concluded, in an advisory memo that is likely to carry significant weight in a pending case against the company and could prevent drivers from joining a union.

The recommendation by the office of general counsel Peter Robb, who was appointed to the National Labor Relations Board by President Donald Trump, was made in a memo dated April 16 and released on Tuesday.The general counsel said in the memo that Uber drivers set their hours, own their cars and are free to work for the company's competitors, so they cannot be considered employees under federal labor law.

A ruling on the case is to be made by an NLRB regional director. Advisory memos from the general counsel's office are generally upheld in rulings. Any decision could be appealed to the NLRB's five-member board, which is also led by Trump appointees but is independent of the general counsel.
The memo will not affect scores of lawsuits claiming Uber drivers should be treated as employees under federal and state wage laws.

San Francisco-based Uber in a statement said it is "focused on improving the quality and security of independent work, while preserving the flexibility drivers and couriers tell us they value."Uber shares were up 6.4 per cent at $39.46 in late trading on the New York Stock Exchange.

 The memo signalled a sharp turn for the general counsel's office, which acts like a prosecutor in NLRB cases, and during the administration of Democratic President Barack Obama maintained that many gig-economy workers are misclassified as independent contractors.Under the National Labor Relations Act, independent contractors cannot join unions and do not have legal protection when they complain about working conditions.