Uber climbs 44% as CEO reveals sufficient funds to survive the Coronavirus pandemic

With Coronavirus restricting people to their homes and the U.S government recommending them to avoid unnecessary traveling, Uber Technologies took a significant hit evident in its 20% decline in the stock market on Wednesday.

CEO Dara Khosrowshahi, however, commented on Thursday that the ride hailing company has sufficient funds to thrive amidst the Coronavirus pandemic. Following his statement, Uber climbed around 44% in the stock market on Thursday to offset all of its previous losses on Wednesday.

CEO Dara Khosroshahi’s Comments On Thursday

As per the CEO:

“We are very fortunate to have a strong cash position with about £8.67 billion of unrestricted cash as of end of February. In any crisis, liquidity is key.”

Khosrowshahi’s comments on Thursday were specifically construed positive as the ongoing health emergency has pushed multiple businesses into accessing credit line or hoarding cash to handle overheads and pay wages.

An extreme scenario, he added, that pushes the ride-hailing unit into a massive 80% decline for the rest of 2020, an unrestricted £3.47 billion cash will still be available to Uber.

“About two-thirds of our cost of revenue and operating expense, excluding stock-based compensation, is variable. If a trip doesn’t happen, many of these costs go away.”

The CEO also highlighted that the U.S epicenter of Coronavirus, Seattle, is posting over 60% decline in rides. The worst, however, is over in regions like Hong Kong where the performance is already starting to recover slowly.

Earlier this week, Uber also declared its shared rides suspended in the U.S and Canada as governments ordered social distancing to contain the fast transmission of the flu-like virus. Uber has lost around 50% of its market value in 2020 so far amidst the Coronavirus pandemic.

Uber Eats Posts Consistent Growth Amidst The Coronavirus Driven Restrictions

Since the temporary shutdown is applicable on the U.S restaurants and consumers are convinced to not go out to grab a bite, Uber Eats (Uber’s food delivery business), is noting consistent growth ascribed to the pandemic.  

In its statement earlier this week, Uber Eats also said that it plans on waiving the delivery fee for U.S and Canada based independent restaurants.

At £17.77 per share, Uber is currently trading just over 30% down (year-to-date). The £30.57 billion company went public in May 2019 when its shares were priced at around £36.0. Uber’s record high in the stock market is £40.20 per share that was noted in June 2019.