There will be a clear path to profitability for Uber in 2020: RBC Capital Markets analyst

Mark Mahaney, RBC Capital Markets lead internet analyst, talks about his top tech picks heading into 2020 on "Squawk Alley."

Uber continues to burn through cash, but CEO Dara Khosrowshahi said the company could become profitable in about two years.

The ride-hailing company will be profitable on an adjusted EBITDA (earnings before interest, tax, depreciation and amortization) basis for the full year in 2021, Khosrowshahi said in an interview on Monday with CNBC’s Deirdre Bosa.

“While we haven’t finalized our planning, and it’s going to take a lot of hard work from a lot of folks, we are actually targeting 2021,” Khosrowshahi said. “So we know there is the expectation of profitability, and we expect to deliver” by that time, he said.

Khosrowshahi’s comments came after Uber reported over $1 billion in net losses in the third quarter, sending the stock down more than 5% in extended trading. That’s despite better-than-expected results on the top and bottom lines.

Uber is facing pressure from Wall Street to turn a profit as investors have grown increasingly skeptical of money-losing tech companies. Rival ride-sharing platform Lyft announced last week that it expects to be profitable on an adjusted EBITDA basis by the fourth quarter of 2021. Both companies’ stocks are trading way below their IPO price from earlier this year.

Despite the staggering losses, Khosrowshahi called out Uber’s rides segment, which grew 19% from a year earlier to $2.9 billion, as a bright spot financially.

“Our rides business already pays for the entire corporate overhead of the company today,” Khosrowshahi said. “We think we can continue it.”

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