Ride giant Uber is being hit hard by a new coronavirus pandemic,media outlet TechCrunch reported. In a conference call with investors Thursday, Dara Khosrowshahi, Uber’s chief executive, said business has fallen by as much as 60-70 percent in the worst-hit cities such as Seattle.
But Khosrowshahi told investors in an update that the company believes it has the ability to “get out of trouble” even in the worst-case scenario, with an 80 per cent reduction in full-year business. Even if passengers travel less, the company is considering using its network to ship other items, such as medicines or essentialitems.
“We’ve been in touch with the health department, we’ve gone through all the processes we need,” Khosrowshahi said of Uber Health. He also said the company had “sufficient liquidity”. The company said it now had $10bn in unlimited cash on hand at the end of February, of which $1.5bn was earmarked for year-end acquisitions, including an investment in Cornershop and its obligations to Careem.
He added that if global business were to fall by as much as 80 per cent (in extreme cases, uber said it would not), there would still be $4bn in unrestricted cash and $2bn in credit lines left in the banks. With the second quarter at its “low point” of recovery in the third quarter, the scenario shows $6 billion in cash on hand, plus $2 billion in revolving credit.
“The most important thing to know is that we have the ability to deal with this crisis and become stronger,” he said by phone. We have enough liquidity. We have a highly variable cost structure, a global presence, multiple lines of business, and these lines of business that provide us with some diversity and case studies to see how quickly our business rebounds after such shocks. All this gives us confidence. Uber will do the same once businesses start migrating. “
Uber did not provide an update on its guidance on receivables thursday, but the company’s overall picture is a positive news for investors. Uber’s shares jumped more than 30 percent at one point on Thursday.
Some cities, such as London, may introduce further “closed-city” measures to limit movement in response to the new crown outbreak. On the other hand, business is picking up in areas where the outbreak is improving. In Hong Kong, for example, peak-hour traffic fell by 45 per cent, but is now down 30 per cent. He added that Uber Eats is expected to be one of the strongest performers as people travel less.
Although the company has a plan in place to support drivers who may be infected with the virus, it has been encouraging those who still work to deliver more for other businesses, particularly Eats, but it could be other projects.
“This is a real strength of our business, not only is we more useful, so it’s our driving force because we can get them to work interchangeably, but Eats can get to work immediately and the Eats business immediately attracts people who are preparing,” he says. “So this is actually what we’re working on and is moving to Eats now, because the Eats business is definitely much better.” The company has waived distribution fees for independent restaurants in cities that remain open.