Please ensure Javascript is enabled for purposes of website accessibility

Uber to Cut 3,000 More Jobs, Shutter 45 Offices, as Coronavirus Fallout Continues

By John Bromels - May 18, 2020 at 1:14PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The new cuts come on top of 3,700 job cuts announced two weeks ago.

Ride-hailing giant Uber Technologies (UBER 0.71%) is planning a second round of job cuts and cost-saving measures, according to an email to employees from CEO Dara Khosrowshahi. 

The company already announced 3,700 job cuts on May 6. This new round of 3,000 additional cuts would leave Uber with about 20,000 employees. If the new cuts occur this month, Uber will have shed about 25% of its workforce in May. That doesn't count the company's drivers, who are considered to be contractors rather than employees.

Uber's shares were up over 6% in today's trading.

A pair of hands holds a smartphone in front of a steering wheel.

Image source: Getty Images.

More changes afoot

In addition to the job cuts, Khosrowshahi said Uber would close 45 offices, including in San Francisco's Pier 70. The tech company also may scale back on noncore areas like freight shipping and driverless technology. 

The one bright spot in Uber's portfolio, food delivery business Uber Eats, has outperformed during the pandemic, with gross bookings up 50% over last year. However, that doesn't make up for the decline in ridership in its flagship ride-hailing business. Uber has reportedly made an offer to acquire rival GrubHub (GRUB) to increase its share of the food delivery business, but so far there's been no official announcement. 

A dire picture

In his email, Khosrowshahi paints a bleak picture of how COVID-19 has affected the company's prospects:

We began 2020 on an accelerated path to total company profitability. Then the coronavirus hit us with a once-in-a-generation public health and economic crisis. People are rightfully staying home, and our Rides business, our main profit generator, is down around 80%. We're seeing some signs of a recovery, but it comes off of a deep hole, with limited visibility as to its speed and shape.

Despite this grim assessment, Uber shares are up 16% year-to-date.

John Bromels has no position in any of the stocks mentioned. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GrubHub Inc. Stock Quote
GrubHub Inc.
Uber Technologies, Inc. Stock Quote
Uber Technologies, Inc.
$32.47 (0.71%) $0.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/14/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.