Ride-hailing apps Uber (UBER) and Lyft (LYFT) have both seen their revenue from fares drop by more than 50 per cent. This is a result of the ongoing Covid-19 pandemic, according to The Information Sources.
It is thought that the impact of the widespread lockdowns imposed across much of the world to arrest the spread of the novel coronavirus has been lighter on Uber than on its close rival. This is because the firm has been paying drivers a lower share of passenger fares than it did 12 months ago.
Nonetheless, Uber’s revenue from passenger rides, after the payment of drivers, is expected to slump to $450m (£366m, €417m) in the first quarter of 2020 from $800m in the fourth quarter of 2019.
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Uber’s diversification into food deliveries has helped it cope with the 70 per cent fall in demand it has witnessed in certain key markets. Nonetheless, the company’s share price has still suffered amid the market-wide coronavirus sell-off, plunging from its 2020 peak of $41.27 in February to a low of $14.82 in mid-March.
The firm’s stock has recovered slightly, to stand at $23.70 in mid-afternoon Friday trading (GMT), after CEO Dara Khosrowshahi told analysts that Uber will have $4bn in cash at the end of 2020. Nonetheless pressures remain.
Indeed, a sign of such pressure can be found in co-founder Garret Camp’s decision to step down as Uber’s director to become a board observer. Camp stated: “I will continue to work with Dara and the product and technology leadership teams to brainstorm new ideas, iterate on plans and designs, and continue to innovate at scale.”
Speaking to CNBC on Thursday, billionaire short-seller Jim Chanos outlined his scepticism in the likes of Uber and Lyft, stating: “the labour pool issue for the gig economy companies is going to loom very very large coming out of this crisis.”