Uber Shares Surge 37% After its CEO Says the Ride-Hailing Giant Has $10 Billion in Cash to Weather the Coronavirus Crisis
As millions of Americans hunker down indoors and many workers are forced remotely, both Uber and Lyft, two of the biggest ride-hailing companies in the U.S., are facing sharp decline in business, especially in New York and San Francisco.
In Uber's home town of San Francisco, the streets are virtually empty as the city remains under a mandatory shelter-in-place order until at least April 7, leaving Uber drivers without customers to pick up.
However, Uber CEO Dara Khosrowshahi said the company has enough cash on hand to withstand the economic loss. On Thursday, Khosrowshahi said that Uber has $10 billion in unrestricted cash as of the end of February. "In any crisis, liquidity is key."
The announcement sent Uber shares 37% higher today to over $20.00 per share. Ubers' stock price fell to a 52 week low of $13.71 this week after the company experienced a steep decline in business due to the Coronavirus crisis that has affected the U.S. economy nationwide.
The U.S. stock market has endured the worst week in history, with the Dow Jones Industrial Average falling by more than 10,000 points to 19,177.
The fallout has also affected Uber's chief rival Lyft, also based in San Francisco.
Lyft announced that the company will stop adding new drivers, effective immediately in New York, San Francisco, Seattle, and other regions hit hard by the coronavirus pandemic. The move was intended to protect the income of Lyft's existing drivers.
Both ride-hailing companies have stopped offering shared rides to help prevent the spread of the coronavirus as well as protecting their own drivers from exposure.
Uber is one of Silicon Valley's most well-funded and valuable startups in recent years, with a market cap of $35 billion. The company went public in May 2019.
However, the company's shares fell about 50% this year, while shares of Uber's main rival Lyft were down 65%. Both companies are struggling to reach profitability in the ride-hailing part of their businesses.
To help diversity its business, Uber has been growing its Uber Eats food delivery subsidiary. Uber Eats is the most profitable division, with revenue of $734 million in Q4 2019, which is a 68% increase from the prior year.
With the U.S. economy grinding to a halt as coronavirus cases rise, Khosrowshahi remains optimistic that the company will rebound from the crisis.
"We believe we're already seeing the worst of the impact and the recovery in some places," Khosrowshahi said. "Once things start moving, Uber will too.
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