Uber stock price down 3% after closing eight Eats locations

Uber stock price down 3% after closing eight Eats locations

  • Uber Eats to close 8 locations worldwide after failing to establish themselves as top food delivery operators
  • The company will transfer Eats operations to its subsidiary Careem in the UAE
  • Uber stock price trades around 3% lower in New York today, approaching the $25.50 support

Shares of Uber (NYSE:UBER) are trading 3% lower today after the ride-hailing giant said it is shutting down its 8 Uber Eats locations across the globe.

Fundamental analysis: Eight markets to be closed on June 04

Uber said it will close Uber Eats operations in eight markets across the globe after failing to establish themselves as the number one or number two food delivery operators in these countries. 

“We have made the decision to discontinue Uber Eats in Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Ukraine, and Uruguay, and to wind down the Eats app and transition operations to Careem in UAE,” a Uber spokesman said

“This continues our strategy of focusing our energy and resources on our top Eats markets around the world.” 

The ride-hailing giant that its ride business will not be affected by these changes. In the United Arab Emirates, Uber Eats operations will be transferred to Careem – Uber’s subsididiary focused on the Middle East.

Uber Eats operations in these 8 markets will be closed by June 4 while around 50 full-time staff will be affected by these changes. These markets accounted for 1% of Eats gross bookings and 4% of Eats adjusted core earnings losses in Q1 2020.

Separately, Uber said that it will likely require all of its drivers to wear face masks amid the COVID-19 pandemic. In the meantime, the company is working on a tech solution to detect whether its drivers are wearing face coverings.

“Our teams are preparing for the next phase of recovery, where we will all have a role to play. We’ll communicate updates directly to users when ready, but in the meantime, we continue to urge all riders and drivers to wear masks or face coverings when using Uber,” the company said in a statement. 

Technical analysis: Uber stock price fails at $32

Shares of Uber are trading 3% lower today after the announcement concerning Uber Eats. The price action rebounded strongly from the record lows in March, but the positive momentum quickly evaporated when the buyers faced strong resistance at $32. 

Uber stock daily chart (TradingView)

As a result, the failed move higher resulted in a bearish weekly candlestick pattern that is likely to invite more selling pressure in the coming weeks. Looking lower, the zone around $25.50 is likely to provide strong support for the buyers and an opportunity to buy Uber stock looking for a retest of the $32 resistance. 

Summary

Uber stock price is down 3% today after the company announced its Uber Eats is pulling out of eight markets worldwide as it couldn’t establish itself among the most popular food delivery operators. 

By Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His passion has given him first hand experience of trading, while his writing means he understands the market forces and wider regulation.

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