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Heard on the Street Blog

Ubernomics: Billions In Bookings, But Still Not Yet Profitable

The gig is up

A new proposal from the US Department of Labor could uproot the way the gig economy operates by forcing companies to recognize workers as employees rather than contractors if they meet certain criteria, tackling the current system of ‘misclassification’.

This news is a big deal for companies who have come to rely on, and ultimately benefit from, their contractor workforce — shares in Lyft and Uber slid over 10% as a result of the announcement.


Uber were quick to downplay the proposal’s potential impact on their ride-hailing and delivery empire, with the company’s head of federal affairs CR Wooters arguing that the rule ‘returns [them] to the Obama era, during which [their] industry grew exponentially’. Wooters is right: the industry around Uber has grown exponentially as the category has matured — the amount of money the company actually makes, on the other hand, has not.

Uber brought in a whopping $29bn in total gross bookings last quarter, a huge rise from even three years ago, as the company's mission has changed from moving people to moving anything. Indeed, Uber booked more business in deliveries than in rides in the second quarter of this year. Despite this impressive diversification, the company still couldn't get into the black, reporting a total operating loss of $713m. Uber, who were sued for wage theft by the California Labor Commissioner in 2020, may continue to struggle to steer towards profitability — especially if this new proposal puts workers back in the driving seat.

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