Taxi-hailing service Uber, which has been hemorrhaging billions for years and in the last few months has been hammered hard by the coronavirus pandemic, may lay off up to 20 percent of its workforce and recently had its chief technology officer resign.
News of the cost-slashing plan under consideration comes via way of the Information, which reported on Tuesday that the layoffs could impact around 5,400 of the company’s 27,000 employees. Thuan Pham, the departing CTO, was the longest-serving senior executive at the firm, surviving waves of scandals that forced the departure of most of its former executive team. The Information reported that he is leaving amid discussions to cut about 800 of the Uber engineering group’s 3,800 staffers (around 21 percent). His last day will be May 16.
A week ago, the Information reported that two people briefed by management said Uber bookings in past weeks are down some 80 percent compared to last year. While a source told the site that Uber Eats, its delivery service, was up 70 percent, that would barely put a dent in the overall revenue losses. Meanwhile, like many of its tech industry brethren, Uber has tried to dodge criticism of its treatment of independent contractors facing elevated risk during the pandemic and has been drawn into court fights over its refusal to pay into state unemployment insurance funds to compensate out-of-work drivers.
CEO Dara Khosrowshai has said the company will have a $4 billion cash pile left even if revenue remains at current levels throughout 2020. As the Information noted, Uber reported about $8 billion cash in hand in mid-March, which does not paint a great picture of its possible losses. A rough estimate is that cutting 5,000 employees would save around $1 billion or an average of $200,000 a head, the site wrote. Uber didn’t deny that big cuts are on the table.
“As you would expect, the company is looking at every possible scenario to ensure we get to the other side of this crisis in a stronger position than ever,” an Uber spokesperson told the Information.
Last year, Uber fired around 1,185 employees over the course of three rounds, primarily affecting members of its marketing, product, engineering, self-driving tech, and recruiting departments. The company previously claimed to be on a track to profitability by the fourth quarter of 2020; its stock price closed on Tuesday at $30.12, about a third off of the $45 it debuted at in its May 2019 initial public offering.
Employees at competitor Lyft are preparing themselves for similar cuts, according to the Information. Other tech firms in the transportation sector are hurting as well: electric scooter rental startups Lime and Bird have suspended services in many markets, with Lime reportedly considering dramatically slashing its valuation as part of an emergency fundraising and Bird laying off around 30 to 40 percent of its employees in a mass Zoom meeting in late March.