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Uber reported one of its worst quarterly performances during Q1 2020 registering a net loss of $2.9 billion. With its business going on a tailspin due to the global lockdown, the company plans to trim 17% of its workforce this year. Uber stock price is going up.
On Thursday, May 7, Uber Technologies Inc (NYSE: UBER) stock showed some volatile price movements. Earlier, the Uber stock price sunk soon hours after the ride-hailing giant unveiled its first-quarter results. The global lockdown orders over the last month have withered the company’s operations to a large scale.
Uber Q1 Results and UBER Stock
Uber Technologies reported its biggest quarterly loss standing at $1.70 per share with a net loss at $2.9 billion in Q1 2020. The gross revenue of the ride-hailing giant stood at $3.54 billion as the company’s bookings plummeted amidst strict lockdown measures.
Speaking at the earnings call, Uber CEO Dara Khosrowshahi said that its ride business was down 80% in April compared to last year. On the other hand, gross bookings for Uber’s food delivery segment jumped 50% year-over-year. As more people stayed at home, the food delivery orders jumped significantly a more restaurants signed-up to Uber’s platform.
On the earnings call, the Uber CEO said that cultural shifts could be long-lasting. “The big opportunity we thought Eats was just got bigger,” the CEO said. However, on a positive note, Khosrowshahi also said that the ride volumes have been jumping high in the last three weeks.
This statement brought optimism back among investors as Uber’s share price jumped 11% to close above $30 levels. At Thursday’s closing, Uber stock was trading at a price of $30.93 with a market cap of $53.4 billion. Now in the pre-market, the stock is over 6% up, at $32.86.
Uber to Trim Its Workforce Owing to COVID Impact
On Wednesday, the ride-hailing giant also mentioned that it will trim 17% of its workforce i.e. lay-off 3700 employees due to the coronavirus impact. Khosrowshahi said that his company has planned to cut costs to the tune of $1 billion in 2020. Thus, this would help them ensure that the company remains on track. A majority of the layoffs could be from Uber’s customer support and recruiting teams.
However, there were also reports that Uber plans to pump $170 million into its bike rental and electric scooter business. Besides, Khosrowshahi also said that Uber is planning to enter the grocery delivery market. Thus, the company is also mulling at a series of acquisitions and expansions.
While Uber has been struggling with handling its revenue, its competitor Lyft Inc (NASDAQ: LYFT) registered a 23% jump in revenues. The company said that strict cost-cutting during the pandemic has helped it stay on the path of profitability. As a result, Lyft shares jumped 20% on Thursday.
Another big hurdle for the two ride-hailing giants is that both these companies are facing a labor lawsuit in California. The lawsuit filed in a Francisco Superior Court states that both Uber and Lyft avoided paying key benefits to its drivers like paid sick leave. The lawsuit mentioned that the ride-hailing companies bypassed this by calling the drivers as contractors instead of employees.