By on May 19, 2020

Uber Technologies eliminated an additional 3,000 jobs on Monday, closing offices around the world as certain regions revealed less growth than the outfit had hoped for. We covered the ride-hailing firm’s financial situation last week, as reports circulated that it wanted to drop a few billion to acquire Grubhub and enhance its own food-delivery service in the wake of the coronavirus pandemic.

At the time, the firm had already cut 3,700 jobs pertaining to customer support and human resources. Even in the absence of people shunning shared transportation and local governments forcing citizens to stay indoors, Uber’s preexisting inability to turn a profit would probably have forced the company to restructure eventually. The pandemic pinned the accelerator to the floor mat, however, likely forcing additional cuts by the company’s own admission. Considering Uber has already axed about a quarter of its global workforce, it’s probably time to place it on death watch. 

According to Bloomberg, the company is hunting for ways to save money. For car manufacturers, the end result of the pandemic has meant tamping down mobility-related side projects and programs that have nothing to do with the core business. General Motors’ Maven project was an early victim.

Uber’s taking similar actions by shutting down its Incubator think tank and AI Labs, as well as a job-matching service called Uber Works. It also intends to further consolidate offices around the globe, forcing additional job cuts. CEO Dara Khosrowshahi confirmed the measures in an email to staff on Monday.

From Bloomberg:

“We must establish ourselves as a self-sustaining enterprise that no longer relies on new capital or investors to keep growing, expanding and innovating,” Khosrowshahi wrote to employees, while dismissing the idea that the moves were done to appease investors. Uber shares initially rose as much as 9 [percent] on the news on Monday, but by 3 p.m. in New York were up only about 3 [percent].

As a result of the changes, Uber will incur $175 million to $220 million in charges, mostly in the second quarter, according to a securities filing Monday.

Since the pandemic began, Uber has been moving to focus its efforts on a few key regions and businesses. The company shuttered a half-dozen food delivery operations, offloaded its cash-burning electric bike group to scooter startup Lime and permanently closed 40 [percent] of its driver stations. One of the offices that will close is in Singapore, where Uber had already sold its Southeast Asia business to local rival Grab in 2018.

Social distancing and shelter-in-place orders stemming from the pandemic have hobbled so-called sharing economy businesses, as customers find themselves with few places to travel, and a new reticence to use the cars or homes of strangers. Lyft Inc., the main alternative to Uber in North America, is cutting about 17 [percent] of staff, furloughing more and reducing salaries. Airbnb Inc. is cutting a quarter of its workforce.

Despite posting its first decline in overall ridership in Q1 of 2020, there are reasons to assume ride sharing might rebound after the pandemic panic subsides a bit. Mass transit is broadly believed to be less appetizing to urbanites in the coming months than outfits like Uber/Lyft and taxi cabs.

Still, no one is under the assumption they’ll become suddenly desirable; it just happens to be the only business in its portfolio that actually seems capable of making it any money. Unfortunately, that doesn’t seem possible for 2020 — leaving Khosrowshahi to suggest $1 billion in cost-cutting measures could help the business turn a profit by the end of 2021. Maybe cornering the food-delivery market will play into that. Talks with Grubhub are rumored to be progressing, though neither company is interested in expressing any confirmation or denial of what’s going on at this juncture.

[Image: MikeDotta/Shutterstock]

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16 Comments on “Uber Death Watch: Ride-hailing Firm Cuts 3,000 Additional Jobs...”

  • avatar

    This is looking like shades of pre- .com bubble bursting almost 20 years ago where everything with a .com at the end had venture capitalists and investors throwing money hand over fist at them, regardless if they had any chance of making money. But let’s face it. If Uber couldn’t make any money in the best of times (like last year), there’s zero chance of survival if people are still skittish for the rest of this year and if business and personal travel stays depressed.

    Did Uber get too big for their britches too quickly? Yes. Get some green on the balance sheet before throwing money around like there’s no tomorrow. That’s Business 101. I know people who drive on the side for Uber and there is almost no activity right now, especially the usually busy airport runs.

    And because this posting has to deal with the coronavirus, the economy, and job loss, let it become hijacked with The Truth About Coronavirus over the next 2 days in 3…2…1…

    • 0 avatar

      When UBER, and a bunch of other companies, started wasting resources on nonsense like driverless cars you knew they were just looking for a story of profitability to sell. They run a taxi service, that’s it. But no, it has to be so much more! That’s because as a taxi service the business is only marginally profitable at best. But how car you take billions out of the business? Sell a story about doing so much more. I think they can function successfully with their core business alone but they’ll have to fire a lot more people to get there. This sudden downturn might actually be good for UBER, forcing them to get serious about what they do well.

    • 0 avatar

      beavis, i mean eric says covid19 is made up. i will be sure to tell my coworkers who lost grandparents that.

      yeah, i was around during dotcombubble 1.0 and its been smelling like that for a few years now. unsustainable business models are unsustainable. splitting amazons heavily subsidized sales from their money making web services division would mean they would have to charge for all their “free” stuff.

    • 0 avatar
      Matt Posky

      At least you got your excellent take down before that happens.

  • avatar

    “Did Uber get too big for their britches too quickly? Yes. Get some green on the balance sheet before throwing money around like there’s no tomorrow. That’s Business 101.”

    No, that USED TO BE Business 101. Now you’re supposed to be leveraged beyond belief, borrowing cash so you can make market moves above your company’s weight. If you win, you’re the next billionaire! If you go bankrupt, who cares? Either get a government bailout or close shop and walk away with the millions of your company’s debt that you managed to pay yourself.

    • 0 avatar

      100% correct. For every, there are hundreds of strewn all over the vast wasteland. The .com bust did weed out the pretenders – those who wanted to take the money and run. This economic downturn will probably do the same – if you are in any kind of food/grocery/meal prep business or delivery service and haven’t been able to capitalize on this, it’s time to look over your business model and plan again.

    • 0 avatar

      Do you mean “Tesla-effect”?

  • avatar

    @theflyersfan: I would agree with your assessment. As the article mentions, Uber was in a “uncomfortable” position. Paring back to core business that is profitable makes sense. The economic recovery from the “lock down” is unclear with “experts” on both sides making somewhat credible cases for their particular view. Spoke with a restaurant owner yesterday who revealed the side of this recovery issue that is not widely reported or known. His 144 year old business, as it stands right now without some kind of “inspired” intervention, will not exist after this year. He does have a plan that will not only benefit his business, but hopefully could provide as much as an estimated $50 mil “self stimulus” to those in the supply chain and offer him the ability to provide $10k to mom & pop restaurants per state which he is planning on doing should his plan work.

    Some have said when things open back up, folks will go back to work, the economy will recover. What is not considered is that some will have no business to go back to (thinking particularly of “mom and pop” businesses in industries like restaurants, bakeries, etc.). Definitely something to watch.

  • avatar

    Why are so many of these auto websites and the people commenting on these sites so negative towards Uber and Lyft? I bet 95% of articles on these sites related to those companies have a negative / pessimistic slant.

    • 0 avatar

      Immoral business model. Take billions of dollars from the super-rich, use half the billions to sell rides at a loss, drive taxi companies out of business and crowd out public transit, ignore laws, push city governments around, obtain a monopoly, bully your own drivers and beat them down, then use the other half of the billions to develop robot taxis, fire all your drivers, sit back and collect billions of dollars a year forever.

      It’s hyper-aggressive rent-seeking sociopathic behavior. A lot of companies behave somewhat like this, but Uber became the epitome of it.

  • avatar

    Uber has thousands of employees? Really? What do they do? I assumed they had a hundred coders, a bunch of finance people and that was it. They dont own or maintain their cars and I assumed all the insurance legal regulatory and advertising was just contracted out.

    • 0 avatar

      I’ve always wondered that myself. What do they do at HQ? I assume they have thousands of lawyers, trying to deal with federal state and local laws, as well as all the lawsuits they face.

      Would you believe that in the ToS for the drivers that Uber doesn’t even commit of having a functioning app?

      Uber really needs to move out of Silicon Valley to a cheaper part of the country, so that they can slash their overhead. They need to stop thinking like a tech company and start thinking like a utility.

      • 0 avatar

        What do they do at HQ? They hope to turn a buck selling data garnered from the riders and drivers. If they’re really on the ball (and lucky) some MIB guys will come calling and offer them a secret deal like the data sharing contracts they gave to Google and FaceBook.

  • avatar

    the mom and pops that do survive will be the ones that own their place.

  • avatar

    Ehh, I drive for Uber Eats in between career positions and I’m making a nice chunk of money. The only reason this company loses money is because they are spending it where it makes no sense. Autonomous cars will never be a thing and nobody is buying it after the past 5 years of pure hype from everyone.

    This company has an ideal business model besides the needless spending.

  • avatar

    Personally, I’m rooting for the demise of this unethical company.

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