Uber just laid off 3,700 people, around 14% of its total workforce. In a note to staff, CEO Dara Khosrowshahi said the layoffs were in the "Community Operations" (that's customer and driver support) and recruiting divisions, which have become less necessary now that ride volume has plummeted.
Khosrowshahi called the layoffs "one part of a broader exercise to make … difficult adjustments to our cost structure."
The scale of the cuts underlines how badly Uber's been hit by the crisis. On Jan. 1, analysts expected Uber to bring in $4.41 billion in revenue for Q2 2020, according to Koyfin data. They now expect just $2.34 billion.
Uber reports first-quarter earnings Thursday, where the scale of disruption will become clear.
Wedbush analysts forecast a 38% year-on-year drop in monthly active users for Q1, thanks to the company's exposure to Europe and Asia, which coronavirus affected before the U.S. And "given Uber's greater exposure to business and airport travel use cases," the analysts expect a 41% year-on-year drop in Rides revenue.
Uber Eats could have been the company's saving grace, with millions of people turning to takeout as restaurants shut. But it looks set to offer little solace, thanks to the sheer amount of competition in the market: Heavy discounting has hit delivery margins and sparked price wars, while regulation has capped commissions in some markets.
But the worst is yet to come. Though the first quarter was bad, analysts expect even worse results for Q2: Wedbush thinks Rides revenue could contract by 69% year-on-year, with a 66% fall for Lyft. And with the pandemic set to linger, "it's going to be a very, very long time before either one of these companies sees any kind of a pickup," said BK Asset Management's Boris Schlossberg.
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