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Uber (UBER) stock price is at $23.54 which is a 10.29% decline since trading started. Lyft (LYFT) stock price is at $25.29. This is an 12.82% decline since trading hours began as well.
Uber Technologies Inc (NASDAQ: UBER) and Lyft Inc (NASDAQ: LYFT) stock prices have fallen. Sources say that this is due to COVID-19 fears. The main fears have to do with people sharing car rides with absolute strangers. Those fears are said to be part of the general panic sweeping through the world at the moment. There is much confusion at the moment about COVID-19. At the moment, governments across the world are struggling to grasp the full impact of the Coronavirus.
The United States has decided to shut its skies to air travel from Europe for 30 days. This has further escalated fears after the World Health Organization (WHO) labeled the crisis a pandemic. Economic rescue measures haven’t been announced yet by the United States as well.
Uber and Lyft Stock Prices Face Many Risks
Travel restrictions have increased on a global scale. This has affected a significant percentage of ride-shares. Sources say that ride-shares form a significant part of Uber’s business (up to 15%). The risk of falling revenues or ride-shares is significant. These fears are expected to grow as well. If things continue in this direction, many fear that the share business model will become unworkable. this could also lead to companies like Uber, Lyft and Airbnb to fail. It will also dampen the hopes of many enthusiasts for new business models in the 21st century to thrive,
This also raises the risk of such companies becoming cash-strapped. This according to analysts is due to the limited revenues coming in. The companies will be expected to run out of cash as the chaos continues.
Uber has already started responding to the coronavirus in several ways. Drivers who have have been exposed to the virus may be suspended. The company has also indicated that those drivers may become eligible for sick pay of up to 14 days.
More workers are already working remotely. The new trend places ride-share companies at further risk. Uber itself has already given notice to its workers to work from home.
The Global Downtrend Continues
Technology stocks haven’t been immune to the general market downtrend. The S&P 500 reportedly fell 4.9% while the Dow Jones Industrial Average (DJIA) fell by about 5.6% in early trading hours. The Nasdaq composite is also down by about 4.7%.
Ride-sharing companies are already showing signs of financial weakness. Share prices of both uber ad Lyft reportedly fell below their IPO ranges. Uber reportedly fell 9.4% while Lyft fell by 11.5 %.
Many in the financial world fear that both companies may miss their optimal promises of profitability.
This means that the volatile times that we are in are set to continue as the world struggles to find a solution at least and a cure at the most to COVID-19. And ride-sharing businesses seem to be a part of those on the losing end. If such businesses weather the storm, it will be because they have introduced innovations that are storm-proof. This is what technology startup unicorns are known for.
At the time of filing this report, Uber (UBER) stock price is at $23.54 which is a 10.29% decline since trading started. Lyft (LYFT) stock price is at $25.29. This is an 12.82% decline since trading hours began as well.