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The more revenue Uber Eats brings in, the larger the losses. This past quarter Uber Eats was able to improve its sales by 154% year-over-year, but the segment’s EBITDA was down 111%, somehow losing more than it netted in sales.
Segment Concerns
Uber Eats is operating in a very competitive landscape. There are a handful of services for customers to choose from, but the largest in the space include Grubhub GRUB, DoorDash, and PostMates. The meal delivery segment grew by 41% in 2019, according to the Second Measure. Grubhub had been the segment leader for some time but recently lost that title to DoorDash. Below you can see a Second Measure graphic of how the competition in the space has heated up over the past 2 years.
Grubhub has been struggling to stay afloat as the competition steepens. The firm has seen a significant deceleration of sales, earnings that have turned negative, and a share price breakdown of 40% in the past 52-weeks. Uber Eats may be headed in the same direction. The battle for meal delivery domination is losing these public companies an excessive amount of money, and this may be a race to the bottom (aka the end of their capital)…