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Uber stock price rose yesterday but is slightly down in the pre-market after the rideshare company decided to shut down operations in 45 offices and cut 3,000 jobs.
Uber Technologies Inc (NYSE: UBER) stock price rose in the last trading session by about 3.54% to $33.62. This occurred as the rideshare company decided to cut 3,000 jobs. It also indicated that 45 offices around the world will be closing. Cuts to business units are also expected. All this is attributed to teh ongoing coronavirus pandemic, you can read more about it here.
A the time of filing this report, in the pre-market, Uber stock was $33.55 (-0.21%).
Uber (UBER) Stock Price Rises while Cuts Are Made
Sources say that Uber CEO CEO Dara Khosrowshahi indicated this in an e-mail. He stated:
“Our balance sheet is strong, Eats is doing great, Rides looks a little better, maybe we can wait for this damn virus out…I wanted there to be a different answer.”
“Let me talk to a few more CEOs…maybe one of them will tell me some good news, but there simply was no good news to hear. Ultimately, I realized that hoping the world would return to normal within any predictable timeframe, so we could pick up where we left off on our path to profitability, was not a viable option,” continued he.
Uber stocks jumped up by as much as 9% at the news. This comes as other business units in Uber’s cachet seem to be driving revenues. Sources say that Uber’s food delivery service Uber Eats is up in terms of revenues by 50%.
Eats had bookings worth $4.68 billion. Khosrowshahi indicated caution on the side of Uber’s management at the news. He conceded that though Eats is making money at the moment, the revenues aren’t covering expenses.
This is the second round of cuts that the rideshare company is undergoing in less than a month. On May 6th, Uber cut about 3,700 employees. Uber’s human resource capacity stands at about 20,000 for now.
Khosrowshahi indicated that the company was providing exit support for fired employees. He said that Uber “worked to provide strong severance benefits and other support for those leaving Uber, like healthcare coverage and an alumni talent directory.”
Uber’s board of directors are expected to forgo their retainer for the rest of this year. This and other measures are part of measures that Khosrowshahi and his team are making to save at least $1 billion in expenses.
Acquisition of Grubhub Is Still in Works
Despite its internal money problems, Uber is looking to acquire Grubhub. This is to increase the coverage of its food delivery unit. a combination of these two companies under one umbrella will create the largest food delivery business in the U.S.
A timeline for the finalization of the deal remains unclear.
Uber has also indicated that it is shutting down its incubator unit. Autonomous driving unit AI Labs is going under the knife as well. Shift matching service Uber Works is expected to go as well.
Uber’s drivers aren’t affected by the layoffs. They have classified as independent contractors rather than workers. They are currently in a tug-of-war with the rideshare company.
As the COVID-19 pandemic continues to cause chaos, companies are downsizing their operations. This will be the new trend of events until the end of the COVID-19 situation.