- Uber has seen its rides business shrink up to 80% as the spreading coronavirus forces people to stay home.
- The company is modeling up to an $7 billion hit in its worst-case scenario model, it said Thursday.
- Executives said on a conference call that Uber Eats could help ease some of the pain as people order take out and delivery.
- Visit Business Insider’s homepage for more stories.
Uber is preparing for a worst-case scenario as the spreading coronavirus eats into its rides business and cripple larges swaths of the global economy.
“This is most definitely an unprecedented time,” Dara Khosrowshahi, Uber’s chief executive, told analysts on a conference call Thursday morning as markets yet again plunged into the red. “We are well positioned to weather this.”
In a worst-case scenario, Uber is expecting its total rides to decline 80% for the entire year. That would result in its total unrestricted cash decreasing from $10 billion in its most recent financial reports to $3 billion not including a $2 billion credit revolver.
“We don’t see that happening, but feel the responsibility to model it,” Khosrowshahi said.
What’s most likely to happen is that the coronavirus peaks in the second quarter, which ends in June. In that case, Uber says it will finish the year with $6 billion in unrestricted cash and still not have to touch its credit lines.
“The situation remains highly fluid,” Khosrowshahi said, explaining why the company was not yet updating its financial guidance. Most recently, it said it expects to turn a form of profit by the end of 2020. For now, that’s still the plan.
Uber Eats could make up some of the losses felt in ride-hailing.
The segment has been rapidly growing even before the dropoff in Uber’s core taxi business, and executives said Thursday they expect to siphon more riders into the delivery unit as people are forced to stay home.
“Our Eats Business has become an important resource right now, especially by restaurants hit by containment policies,” Khosrowshahi said. “Even in Seattle it’s still growing. Our SMB sales team closing 2.5-times the new restaurants normally do. Eats has become all the more important.”
But until the virus peaks and begins to wane, which some predict could take over a month, it’s mostly a waiting game. Uber previously vowed to pay drivers and couriers hit by quarantine policies or who get sick, and said it’s actively lobbying to have them included in any government financial aid packages.
Shares of Uber have been walloped alongside the broader market selloff in March. The stock is down some 38% since the beginning of the year, but gained 28% in early trading Thursday following the call.
“Our balance sheet incredibly strong,” Khosrowshahi said, “We have plenty of liquidity on the books which positions us to come out of this crisis strong and capable.”