Shares of Uber Technologies (UBER 2.95%) were sliding again today, as the ridesharing giant continued to get pounded by the coronavirus sell-off. Uber, which operates around most of the world, has been particularly sensitive to coronavirus fears, with investors believing that riders will be less likely to use shared vehicles if the outbreak gets worse.
Uber shares closed down 11.1% while rival Lyft was down 8.9%. The S&P 500, meanwhile, closed down 7.6%.
A crash in oil prices amid a price war between Russia and Saudi Arabia combined with growing fears about a global pandemic to cause a crash in the stock market today. Ironically, lower gas prices would favor Uber, or at least its drivers, but the market overlooked that fact as the impact of the coronavirus remained top-of-mind for investors.
There are also related concerns about Uber, including that sick drivers could spread the virus, and that the company, whose business is correlated with the travel economy, will take a hit as business travelers and vacationers cancel travel plans. Over the weekend, the company said it would give sick leave to drivers who were diagnosed with the coronavirus.
It's unclear if Uber is seeing a significant decline in ridership in major markets like the U.S., but lockdown conditions have prevailed in countries like China and Italy, a sign of what could happen in the rest of the world if the outbreak gets worse.
Uber shares are now down 31% since the coronavirus sell-off began, worse than the 18% decline in the S&P 500. Investors should expect continued pressure on the stock as long as the virus is in the news and the outbreak appears to be expanding. As an unprofitable company, Uber is also at risk of a bear market or a recession, since investors tend to avoid growth stocks in such environments. The outbreak could also force the company to delay its goal of turning profitable on an adjusted EBITDA basis by the end of this year. For all these reasons, it's easy to see why the stock is down today.