It makes sense that citizens would feel less comfortable than usual getting into a Uber that they know has been sat in by countless other customers in the middle of a global health crisis. Uber rides in general have still been occurring with stricter health and safety procedures enforced throughout the past few months, however, overall business is way down for the riding division of their company.
The company’s goal pre-pandemic was to be “profitable on an adjusted basis before the end of 2021,” according to executives. They planned on meeting this goal by making accurate cuts to certain annual costs while also maintaining a strong balancing sheet in regard to fund distribution throughout Uber Technologies’ many departments.
Thanks to the pandemic, however, in the second quarter of this year Uber reported an adjusted loss in earnings of $837 million while shares dropped by 2.9%.
In the past, Uber’s ride-hailing trips accounted for nearly 66% of the company’s total revenue. The revenue from the rides has increased 5% within the past month when compared to the drop in April, however, total gross bookings are down 75% from what it was in 2019. Dara Khosrowshahi is Uber’s Chief Executive Officer, and held a meeting for executive heads and analysts this week where she told them that if they want their rides to recover, it’s more so dependent on every country’s ability to contain the virus.
It really is for the most part out of Uber’s hands, the same way economic recovery is out of every industry leader’s hands right now. The Coronavirus pandemic has made it relatively impossible for most businesses to run to the same extent that they were before. In Hong Kong and New Zealand specifically, ride-bookings for Uber has monumentally increased within the past month, as the two locations were both able to completely eradicate the virus from their citizens.
“Trip requests in Germany, France, and Spain have improved like New Zealand. Our global geographic footprint remains a huge advantage.”
In April through June of this year Uber reported a $1.8 billion net loss, which included charges that related to laying off nearly 25% of their global workforce; which occurred during the initial height of cases in the US back in April. The United States is by far Uber’s largest market despite being located in so many other countries, so the fact that the US is also currently one of the most infected countries in the world is detrimental.
Uber operates out of 69 countries and initially had over 99 million employees working on their own time through the app. Now, thanks to all the cuts amid the pandemic, that workforce has dropped down to 55 million employees.
Second-quarter revenue for Uber Rides dropped 29% to $2.24 billion when compared to 2019’s second-quarter, however, Uber Eats nearly doubled their revenue to $1.2 billion. This is likely to the much greater demand for delivery food services since everyone is supposed to be staying home now anyway. Uber also announced last week that they acquired the rights to Postmates Inc., one of their greatest competitors in terms of delivery services, for $2.65 billion so that they could expand the Uber Eats business into delivering even more everyday items such as cleaning supplies, furniture, tools, and more!
Uber Eats has closed down some of the locations where they operate to make room for even more delivery services in more metropolitan areas such as New York City or Los Angeles. Uber executives in general believe that by further cutting costs they’ll still be able to reach their 2021 goal especially with the way that Uber Eats is growing.