Uber Laid Off 3,000 More To Combat Losses, And Its Stock Jumped By 9 Percent

Popular ride-hailing app Uber has announced that it will be laying off another 3000 employees to survive losses by the COVID-19 pandemic.

This comes after it laid off 3,700 employees -- nearly 25 percent of its workforce -- to save $1 billion in costs.

Reuters

Reported first by the Wall Street Journal, Uber CEO Dara Khosrowshahi said in an internal memo to the employees stating, ¡°I knew that I had to make a hard decision, not because we are a public company, or to protect or stock price, or to please our Board or investors. I had to make this decision because our very future as an essential service for the cities of the world ¡ª our being there for millions of people and businesses who rely on us ¡ª demands it. We must establish ourselves as a self-sustaining enterprise that no longer relies on new capital or investors to keep growing, expanding, and innovating.¡±

As a part of the layoffs, Uber will be paying up a whopping $145 million to its staff as a severance, along with some other benefits. It¡¯ll also be paying up to $80 million to shut offices.

It goes without saying that Uber wasn¡¯t having a good time. Even before the lockdown, it was engulfed in losses as it wasn¡¯t able to reach EBITA (Earnings before interest, taxes, and amortization) profitability. It had planned to reach this goal this year. However, during the lockdown, the ride frequency went down by around 80 percent, setting back this timeline.

The Guardian

Along with this, Uber also shut down its tech incubator and AI labs that it announced in September last year. Zhenya Lindgardt, VP of customer engagement and business strategy will also be exiting the company.

What¡¯s odd is that after all this, Uber shares were spiking, as much as 9 percent. The stock ended the day up by 3.5 percent.

One Uber product that is doing fairly well is Uber Eats. in Q1, the app got booking of around $4.68 billion -- up 52 percent from same quarter last year. Khosrowshahi stated, ¡°I will caution that while Eats growth is accelerating, the business today doesn¡¯t come close to covering our expenses. I have every belief that the moves we are making will get Eats to profitability, just as we did with Rides, but it¡¯s not going to happen overnight.¡±

Reuters

He concluded, stating, ¡°Having learned my own personal lesson about the unpredictability of the world from the punch-in-the-gut called COVID-19, I will not make any claims with absolute certainty regarding our future.¡±

He added, ¡°I will tell you, however, that we are making really, really hard choices now, so that we can say our goodbyes, have as much clarity as we can, move forward, and start to build again with confidence.¡±