Uber Technologies Inc. has 91 million users, but growth is slowing and it may never make a profit, the ride-hailing company said Thursday in its initial public offering filing. 

The document gave the first comprehensive financial picture of the company, which was started in 2009 after its founders struggled to get a cab on a snowy night. 

The filing underscores the rapid growth of Uber’s business in the last three years but also how a string of public scandals and increased competition from rivals have weighed on its plans to attract and retain riders. 

$3B loss from operations

The disclosure also highlighted how far Uber remains from turning a profit, with the company cautioning it expects operating expenses to “increase significantly in the foreseeable future” and it “may not achieve profitability.” Uber lost $3.03 billion in 2018 from operations, excluding one-off gains. 

The S-1 filing with the U.S. Securities and Exchange Commission revealed Uber had 91 million average monthly active users on its platforms, which include ride-hailing and Uber Eats, at the end of 2018. This was up 33.8 percent from 2017, but growth slowed from 51 percent a year earlier. 

Uber in 2018 had revenue of $11.3 billion, up around 42 percent over 2017, again below the 106 percent growth in the prior year. 

Uber set a placeholder amount of $1 billion but did not specify the size of the IPO. Reuters reported this week that Uber plans to sell around $10 billion worth of stock at a valuation of between $90 billion and $100 billion.

Investment bankers had previously told Uber it could be worth as much as $120 billion. 

Uber will follow Lyft Inc. in going public. Shares in its smaller rival closed at $61.01 on Thursday, 15 percent below its IPO price set late last month, a development that has sent chilling signals to other tech startups looking to go public. 

Adverse events

After making the public filing, Uber will begin a series of investor presentations, called a road show, which Reuters has reported will start the week of April 29. The company is on track to price its IPO and begin trading on the New York Stock Exchange in early May.

Uber faces questions about how it will navigate any transition toward self-driving vehicles, a technology seen as potentially dramatically lowering costs but also as possibly disrupting its business model.

One advantage Uber will likely seek to play up to investors is that it is the largest player in many of the markets in which it operates. Analysts consider building scale crucial for Uber’s business model to become profitable.

In addition to answering questions about the company’s finances, Uber Chief Executive Dara Khosrowshahi will be tasked with convincing investors that he has successfully changed the culture and business practices after a series of embarrassing scandals over the last two years.

Those have included sexual harassment allegations, a massive data breach that was concealed from regulators, use of illicit software to evade authorities and allegations of bribery overseas. Khosrowshahi joined Uber in 2017 from Expedia Inc. to replace company co-founder Travis Kalanick, who was ousted as CEO. 

Uber said in its filing its ridesharing position in the United States and Canada was “significantly impacted by adverse publicity events” and that its position in many markets has been threatened by discounts from other ride-hailing companies. 

A #DeleteUber campaign surged on social media in 2017 after a public relations crisis, which Uber said in its filing meant hundreds of thousands of consumers stopped using its platform within days. 
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Hunter-gatherers in the Amazon sought in court on Thursday to stop Ecuador’s government from auctioning their land to oil companies, as tension mounts over the future of the rainforest. 

In a lawsuit seen by the Thomson Reuters Foundation — which could set a precedent for other tribes opposed to drilling — the Waorani said the government did not properly consult them in 2012 over plans to auction their land to oil companies. 

“We live on these lands and we want to continue to live there in harmony. We will defend them. Our fight is that our rights are respected,” said Nemonte Nenquimo, a leader of the 2,000-strong Waorani. 

“Our fight is not just a fight about oil. This is a fight about different ways of living — one that protects life and one that destroys life,” said Nenquimo, from Pastaza province in the eastern Amazon. 

Ecuador’s energy and environment ministries, the respondents in the case, and the nation’s hydrocarbons secretary were not immediately available to comment. 

When President Lenin Moreno met Waorani leaders last year to hear their concerns, he said it was important to have a dialog and reach a consenus. 

Tensions have simmered between indigenous communities and oil companies in Ecuador since Texaco — now Chevron — began operations in the Amazon in the 1960s.  

​Key step

Ecuador is pushing to open up more rainforest and develop its oil and gas reserves in the hope of improving its sluggish economy and cutting its high fiscal deficit and foreign debt. 

The constitution gives the government the right to develop energy projects and extract minerals on any land, regardless of who owns it, but requires that communities are consulted first and are properly informed about any projects and their impact. 

Laws to regulate the consultation process have yet to be introduced, although the court case could push the government to do this, said Brian Parker, a lawyer with campaign group Amazon Frontlines, which is supporting the Waorani. 

“The lawsuit is to ensure that the processes enshrined in the constitution are carried through to guarantee the Waorani rights to prior consultation and their rights to territory,” said Parker, who is based in Ecuador. 

“The fact that the Waoroni have a chance in court to be able to plead their case is in itself a very important step,” he said, adding that a court victory would provide an “invaluable precedent” for other indigenous Amazonian tribes. 

The government announced last year that it had divided swaths of forest up into blocs for auction, one of which — bloc 22 — covers the Waorani’s ancestral lands, raising the specter of pollution and an end to their way of life. 

​Present for hearing

Hundreds of Waorani and other indigenous peoples arrived in Ecuador’s eastern city of Puyo to witness the court hearing, which is expected to include several days of oral testimony from Waorani leaders, with a decision in the next few weeks. 

Ecuadorians voted last year to give broad backing to limits on oil production and mining in environmentally sensitive areas, among other issues. 

In two landmark cases in 2018, local courts sided with indigenous communities who said the government had failed to inform them before designating their land for mineral exploitation. 

The Costa Rica based Inter-American Court of Human Rights also ruled in 2012 that Ecuador had violated its Sarayaku Amazonian community’s right to prior consultation before drillers started exploration on their lands in the late 1990s. 
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One group in the United States who is not enjoying the low national unemployment rate is 18- to 24-year-old young adults who lack higher education, according to a new report.

For them, the unemployment rate is 17 percent, according to recent research by the Brookings Institution. By comparison, the unemployment rate for the general population was 3.8 percent in March.

“In theory, the path to employment providing financial security in adulthood is simple: finish high school, enroll in and complete college or training that is affordable and a good fit, gain some work experience along the way, and launch a career,” wrote Brookings’ Martha Ross and Natalie Holmes in their report. “Meet the millions of young adults who are out of work.”

The report characterized the younger unemployed as bilingual Karina, 19, who graduated high school recently and is considering continuing her studies; single-mom Monica, 23; Juan, 20, who attends community college and has worked seasonal jobs; 19-year-old Stephanie who left state university after a year because of financial concerns; Matt, 24, who has an associate’s degree but who lost his job at a car dealership when the business closed; and Amy, 22, who has a bachelor’s and volunteers as a tutor.

Ross and Holmes described the young unemployed in relation to education:

18 to 21 year olds with a high school diploma or less (37% of total out of work youth)
22 to 24 year olds with a high school diploma or less (25%)
18 to 21 year olds with at least some education beyond high school (17%)
22 to 24 year olds with at least some education beyond high school (15%)
22 to 24 year olds with bachelor’s degrees (6%)



 

In the first group, three-quarters live with their parents or grandparents “in modest circumstances,” sharing a median family income of $40,000. “They have limited connection to the work world, as only 30 percent worked in the past year, and less than half (45 percent) are looking for work. Relatively small shares are in school (8 percent) or have children (11 percent).” Nearly 40 percent live below the poverty line.

Seventy percent had a high school diploma.

The second group “are the least likely of all the groups to live with their parents (57 percent), and the most likely to have children (24 percent).” Their median family income of $36,000, the lowest among the groups, put 43 percent of them below the poverty line. One-third worked in the past year, less than half were looking for work, and only 2 percent were enrolled.

Sixty-six percent had a high school diploma.

In the third group, more than 90 percent have some college but no degree. (Of these unemployed, 8 percent have an associate or bachelor’s degree.) Fifty-one percent are in school, and 72 percent seek work. Nearly half (43 percent) worked in the past year. Three out of four live with parents or grandparents with low to moderate incomes, almost 30 percent live below the poverty line with a median family income of $54,000.

Ninety-two percent had some college.

In the fourth group, about one in four earned an associate or bachelor’s degree, but two-thirds of them live with parents or grandparents in a household with a median family income of $52,000. They are the second most likely of the groups to be in school (27 percent), to have children (16 percent), to be seeking work (62 percent), and to have worked in the past year (44 percent). One in three live below the poverty line.

Seventy-nine percent had some college, 14 percent had an associate degree, and 8 percent had a bachelor’s degree.

Among the fifth and last group, nearly half (47 percent) worked in the past year, and 58 percent are looking for work. Two-thirds live with their parents who have a median family income of $92,000, considerably higher than other groups. Only one in four lives below the poverty line, however, which could reflect that they are early in their career, when earnings are typically lower, or perhaps a deeper level of disadvantage.

All in that group had attained a bachelor’s degree.

English ability among all groups was not a persistent problem, Brookings reported, with 9 percent of the 2.3 million young people out of work reporting limited English skills. Hispanics dominated the groups of lower education out of work. Whites dominated the higher education out of work groups.

The gender split was not wide in any group.

“This path does not appear to work equally well for all, particularly in light of the effects of the Great Recession and the declining rates of employment among teens and young adults since about 2000,” the authors wrote.

 
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U.S. consumer prices increased by the most in 14 months in March, but the underlying inflation trend remained benign amid slowing domestic and global economic growth.

The mixed report from the Labor Department on Wednesday was broadly supportive of the Federal Reserve’s decision last month to suspended its three-year campaign to raise interest rates.

The U.S. central bank dropped projections for any rate hikes this year after lifting borrowing costs four times in 2018.

Minutes of the Fed’s March 19-20 meeting, published on Wednesday, showed most policymakers viewed price pressures as “muted,” but expected inflation to rise to or near the central bank’s 2 percent target. The Fed’s preferred inflation measure, the personal consumption expenditures price index excluding food and energy is currently at 1.8 percent.

“For the most part, inflation remains tame,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “The Fed effectively went on vacation and is likely to stay there for quite a few more months.”

The Labor Department said its Consumer Price Index rose 0.4 percent, boosted by increases in the costs of food, gasoline and rents. That was the biggest advance since January 2018 and followed a 0.2 percent gain in February.

In the 12 months through March, the CPI increased 1.9 percent. The CPI gained 1.5 percent in February, which was the smallest rise since September 2016. Economists polled by Reuters had forecast the CPI climbing 0.3 percent in March and accelerating 1.8 percent year-on-year.

Stripping out the volatile food and energy components, the CPI nudged up 0.1 percent, matching February’s gain. The so-called core CPI was held down by a 1.9 percent plunge in apparel prices, the largest drop since January 1949.

The government last month introduced a new method and data to calculate apparel prices. Apparel prices, which had increased for two straight months, trimmed the core CPI by 0.07 percentage point in March. Many economists expected a reversal in April.

“The new price collection methodology for apparel incorporates corporate data from one unidentified department store to complement prior survey-based collection,” said Kathy

Bostjancic, head of U.S. Macro Investor Services at Oxford Economics in New York. “The new methodology appears more likely to show large monthly declines due to the lifecycle of apparel.”

Low inflation expectations

In the 12 months through March, the core CPI increased 2.0 percent, the smallest advance since February 2018. The core CPI rose 2.1 percent year-on-year in February.

The dollar was trading slightly lower against a basket of currencies, while U.S. Treasury prices rose. Stocks on Wall Street were mostly higher.

Inflation has remained muted, with wage growth increasing moderately despite tightening labor market conditions. Minutes of the March policy meeting showed some Fed officials believed the benign price pressures could be the result of low inflation expectations and also an indication the labor market was likely not as tight as implied by measures of resource utilization.

“The minutes reinforce our view that rates are on hold for the foreseeable future, though this could shift if the economy and or inflation surprise to the up or down sides,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.

A 3.5 percent jump in energy prices in March accounted for about 60 percent of the increase in the CPI last month. Gasoline prices surged 6.5 percent, the biggest gain since September 2017, after rising 1.5 percent in February.

Food prices gained 0.3 percent after accelerating 0.4 percent in February.

Food consumed at home increased 0.4 percent. Consumers also paid more for rent. Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, increased 0.3 percent in March after a similar gain in February.

Healthcare costs rebounded 0.3 percent after slipping 0.2 percent in February. There were increases in the costs of prescription medication and hospital services.

The cost of new vehicles rebounded 0.4 percent after declining 0.2 percent in February. But there were decreases in the prices of used motor vehicles and trucks, airline fares and motor vehicle insurance.
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Mexico’s foreign minister on Wednesday criticized hold-ups in the flow of goods and people at the U.S-Mexico border, and said he planned to discuss the matter with U.S. Department of Homeland Security officials later in the day.

After days of traffic delays at sections of the border that have alarmed businesses, Foreign Minister Marcelo Ebrard said the disruptions were raising costs for supply chains in both countries.

“Slowing down the flow of people and goods at the northern border is a very bad idea,” Ebrard said in a post on Twitter, using unusually frank language on an issue that has caused constant friction between Mexico and the administration of U.S. President Donald Trump.

Ebrard said his ministry would get in contact on Wednesday with the new leaders of the U.S. Department of Homeland Security. The department’s former secretary Kirstjen Nielsen, who had overseen Trump’s bitterly contested immigration policies during her tenure, stepped down at the weekend.

The border slowdowns have occurred after Trump late last month threatened to close the frontier if Mexico did not halt a surge in undocumented migrants reaching the United States.

On Monday, a judge in San Francisco said the Trump administration’s policy of sending some asylum seekers to Mexico while their claims worked through a backlogged immigration court system was not authorized by U.S. law.

The White House said on Tuesday it would appeal the ruling and that its policy was part of a “cooperative program extensively negotiated with the government of Mexico.”

However, in a sign of ongoing tensions over the issue, Mexico’s foreign ministry noted afterwards that the return of the migrants was a “unilateral” measure with which it did not agree but was allowing on a “temporary” basis.

On Wednesday morning, only one of six lanes for commercial vehicles was open at the Bridge of the Americas border crossing between Ciudad Juarez and El Paso, according to online data from the U.S. Customs and Border Protection.

 
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