Shares of Uber Technologies (NYSE:UBER) were skyrocketing after the ridesharing giant held a conference call that seemed to calm investors. The company has been one of the biggest losers on the stock market since the coronavirus sell-off began, as lockdown-style conditions in much of the country are clearly impacting demand for transportation.
Uber stock was up 40.3% as of 11:38 a.m. EDT.
Noting liquidity was key in a crisis, CEO Dara Khosrowshahi reminded investors that the company was in a strong cash position, as it has $10 billion in unrestricted cash and no major debt obligations until 2022.
Even in a worst-case scenario, which the company said would be an 80% decline in Rides bookings globally, Khosrowshahi said Uber would still finish the year with $4 billion cash on hand, in addition to a $2 billion revolver. Additionally, the fallout in the market could present opportunities for M&A and market consolidation.
Khosrowshahi also said that its Uber Eats business was performing well, given that many restaurants can no longer have eat-in customers and are relying on delivery apps more than ever. Interest from restaurants has soared, and it's shifted drivers from Rides to Eats as demand for Rides dries up, giving drivers an opportunity to continue earning money.
The company has already seen demand begin to recover in Hong Kong, which it sees as a bullish sign for its other markets as the pandemic plays out across the world. In Seattle, the first U.S. city hit by the coronavirus outbreak, Rides have fallen by 60% to 70%.
Uber is one of the few companies so far to speak directly to investors and to give them insight on how the coronavirus situation is playing out. Just doing that was a smart move and clearly calmed investors. Prior to the call, the stock had fallen more than 60% since Feb. 21 and was down more than two thirds from its IPO last spring.
Uber declined to update its guidance, but the company will likely have to delay its fourth-quarter profitability target, because there's still a lot of uncertainty around the evolving crisis.
Still, like other market leaders, Uber could emerge stronger by using this opportunity to acquire new businesses and gain market share. Its Eats business also gives it cushion that rival Lyft doesn't have.