UBER Stock Down 2% on Wednesday, Uber Unveils $250M Stimulus to Incentivize Drivers

UTC by Steve Muchoki · 3 min read
UBER Stock Down 2% on Wednesday, Uber Unveils $250M Stimulus to Incentivize Drivers
Photo: Depositphotos

Uber stock jumped approximately 109% last year and an extra 11.55% year-to-date. 

Uber Technologies Inc (NYSE: UBER) stock closed yesterday trading at $56.89, down 2% from the day’s opening price. The dip validated a continuation of a multi-week consolidation that began after hitting its all-time high in mid-February.

However, there is the hope of a bull market in the near future as the company reopens its business in the United States. In a bid to accelerate its business as different states reopen their economies, Uber has set aside $250 million as a one-time stimulus to its drivers.

According to the company, the stimulus will help existing drivers and first-time drivers kickstart their operations. “We want drivers to take advantage of higher earnings now because this is likely a temporary situation. As the recovery continues, we expect more drivers will be hitting the road, which means that overtime earnings will come back to pre-Covid levels,” the company said.

Notably, the company has set out a plan to distribute the stimulus to its drivers in different states according to the company’s spokesperson. For example, Uber has guaranteed drivers in Austin up to $1,100 if they achieve 115 trips. Further, drivers can earn $1,775 if they attain 200 trips.

Uber Stock amid the Crisis

The company is seeking to reinvent itself through the pandemic as the competition stiffens in the ride-hailing industry. Uber has been one of the hardest-hit companies during the pandemic. The company that went public a year before the coronavirus onset has struggled in different markets.

However, Uber stock jumped approximately 109% last year and an extra 11.55% year-to-date. In a survey conducted by MarketWatch, Uber stocks received an average of Over rating from 40 ratings.

The company has seen its market valuation rise exponentially since its IPO back in 2019, whereby it stood at approximately $108.03 billion according to MarketWatch.

Uber has diversified into other businesses that include food delivery services through its UberEats among others. However, the company still faces fierce competition from other transportation startups all over the world including Lyft.

Moreover, Uber has over time acquired different companies to help it remain competitive and relevant in the global market. In August last year, Uber acquired a marketplace tech company, Autocab, that connects riders with local taxi operators.

During the latest quarterly earnings results, Uber reported a mixed result. Notably, the company reported earnings per share of 54 cents on revenue of $3.17 billion that was below analysts’ expectations. During the financial year 2020, Uber reported a net loss of $6.77 billion, 20% improvement from the prior year.

The future of Uber stock will significantly depend on the company’s ability to compete with its competitors and welcome more drivers post covid.

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