It will come as no surprise to anyone that Uber is seeing a 60% decline in customers ordering rides in the cities hit hardest by coronavirus. Americans are practicing social distancing and working from home, and with so many businesses closed, there’s nowhere for them to go.
And yet, Uber stock closed Monday up 5%, even as the major indices fell. Uber is up 7% over the past five trading days, while the S&P and Dow are each down around 16% in that time.
The stock surge began Thursday, spiking more than 40% after CEO Dara Khosrowshahi, on a call with analysts, rattled off a list of optimistic notes for Uber amid coronavirus, despite the giant hit to its ride business.
Most importantly, Khosrowshahi said that Uber had $10 billion in cash at the end of February, and that even in a worst-case scenario where coronavirus brings its rides business down 80%, Uber would have $4 billion in cash at the end of the year, plus access to a $2 billion “debt revolver.”
Cash became the big Uber headline of the day on Thursday, but some of the other silver linings Khosrowshahi listed might be even more interesting in the long run.
Uber Eats is seeing a big boost as people stay home and order food delivery, Khosrowshahi said, noting that is the case “even in Seattle,” one of the U.S. cities hit hardest by the virus.
Uber has also implemented a hiring freeze and pulled back $150 million worth in incentives, like promo codes and discounts it offers to riders. Shrinking incentives is something critics of both Uber and Lyft have wanted to see for months as they look for the two companies to shift their focus from customer acquisition to profitability.
Interestingly, Khosrowshahi’s call also appeared to pull Lyft stock 30% higher on Thursday, even though Lyft did not share any news about its cash on hand. It might have helped that Khosrowshahi said on the call that the coronavirus crisis could lead to big market consolidation—which would likely be good for Uber and Lyft, the dominant U.S. market leaders.
Khosrowshahi earned additional points on Monday when he asked President Trump, in a public letter, for financial relief for gig economy workers like Uber drivers. “My goal in writing to you is not to ask for a bailout for Uber, but rather for support for the independent workers on our platform,” he wrote, “and, once we move past the immediate crisis, the opportunity to legally provide them with a real safety net going forward.”
All of this might be cold comfort for most shareholders overall. Even though Uber stock has seen a pop in the last few days as a result of Khosrowshahi’s coronavirus optimism, it has still deeply underperformed the market since it went public nearly one year ago, down 42% since its IPO day and is viewed as one of the poster children for the disappointing tech IPOs of 2019.
Daniel Roberts is an editor-at-large at Yahoo Finance. Follow him on Twitter at @readDanwrite.
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