This week the news is all about Uber earnings and Uber’s layoff announcement. What does this mean for Uber – and for drivers? Senior RSG contributor John Ince breaks down the latest rideshare news, including how drivers are faring in California, below.
Uber Lays Off 400 as Profitability Doubts Linger After I.P.O. [The New York Times]
Sum and Substance: SAN FRANCISCO — Uber said it laid off a third of its marketing team on Monday, or about 400 people, as the ride-hailing company tries to cut costs and streamline its operations after its initial public offering in May.
The cuts, which were also announced internally on Monday, are taking place in multiple Uber offices around the world, the company said. The marketing team had more than 1,200 people before the layoffs. Uber employs almost 25,000 people globally, nearly half of whom are based in the United States, according to recent regulatory filings.
Uber declined to comment further.
My Take: I take this as a clear indication that the party is over at Uber. Perhaps the company will survive, but the heady days of lavish parties, and grand fantasies about a cash cow that all investors want to be in on, are long gone. What’s left is a business model in tatters, a driver corps that’s increasingly aware they’re being exploited, and a bloated overhead structure that’s blowing a huge hole in their financials. What’s there to do? If you’re CEO Dara Khosrowshahi, you start firing people, hence this development. Expect more layoffs in the future.
The Uber and Lyft Drivers Who Call Their Cars Home [The Bold Italic]
Sum and Substance: Outside a 24 Hour Fitness in San Mateo, side-saddling a commercial office space and a tiered parking structure, a swath of strategically tinted cars sit parked, veiled by thin layers of condensation coating their windshields. It’s obvious that people have spent the night inside them, presumably cocooned somewhere either in the back seat or the spacious hatch. Many attempt privacy measures — some using towels or sheets or other fabrics stuffed under the windows to block out wandering eyes. Most display a shared vocational decal: Lyft or Uber.
While most don’t associate hailing a rideshare with the notion of stepping foot inside someone’s home, that’s exactly what some passengers are doing.
The number of people living in their cars overall in the Bay Area has dramatically increased in recent years. The most recent survey of the homeless, released in 2019, found that 35% of all the roughly 8,000 homeless people estimated to be in the city live in their vehicles, up from 13% in 2015.
In response, city officials have recently announced plans to open the first “safe” parking lot near the Balboa Park BART station, where people can sleep in their cars without fear of repercussions and get access to showers, bathrooms, and social services.
Over 40% of drivers admit that they have trouble paying for essentials for the job, such as gas, insurance, and basic vehicle maintenance. Thus, this leaves the net-profit margins on the skinnier side for many rideshare drivers. …
My Take: When juxtaposed against the above article, or any of the other articles we’ve been posting about Uber’s IPO and how early investors made off with a 10,000x return this situation starts to seem positively inhumane. Yet it’s the rules of the game we call capitalism. Travis Kalanick and Garret Camp are now worth over $5 billion while the drivers who made all this possible are sleeping in their cars at night. What’s wrong with this picture?
Ex-Uber CEO’s ‘Cloud Kitchens’ Startup Aims To Open In North Center [San Jose Mercury News]
Sum and Substance: Cloud Kitchens, a startup that rents commercial kitchen space to delivery-only restaurants, aims to convert a property in North Center to into a large kitchen for its clients.
The 10,440-square-foot building at 4131 N. Rockwell St. would be built out to include a 9,000-square-foot commercial kitchen that would be rented out, according to Ald. Matt Martin’s 47th Ward office. The alderman will host a meeting on the proposal at 6 p.m. Wednesday at the Boys and Girls Club, 2501 W. Irving Park Rd.
Former Uber CEO Travis Kalanick has a controlling stake in the company. He helped found Uber in 2009, but resigned amid a cloud of crises that rocked the ride-sharing company, including allegations of sexual harassment and discrimination. Forbes estimates his net worth at $4.8 billion.
My Take: Just in case you happened to be wondering what TK is doing with his billions, here it is – building cloud kitchens. Look on the bright side. Maybe drivers who find themselves down on their luck can work for Travis’ new company and get exploited all over again.
What to Expect from Uber Earnings [Investopedia]
Sum and Substance: Uber Technologies Inc. (UBER), the ride sharing giant and most high profile IPO in years, has faced enormous skepticism among investors amid mounting losses despite surging revenues. That’s why its shares plunged in the days following its public offering in May, though they have since recouped most of their losses.
Uber’s sheer size will make it a focal point of investor attention when it announces its second quarter of earnings as a public company on August 8. Uber’s $73 billion market value dwarfs, for example, auto giants General Motor Co.’s (GM) $58 billion and Ford Motor Co.’s (F) $37 billion, both of which were founded more than a century ago.
What Uber Investors Are Watching For .. Investors are likely to look at a number of key issues when the company reports earnings. Most important, they are sure to focus on whether Uber can be viable financially longterm by narrowing its financial losses as it attempts to boost revenue at a rapid rate. Investors also will want to know how much fare increases in major markets such as New York are hurting consumer demand, which is crucial to maintaining revenue growth. Investors also will want know about progress at business segments like meal-delivery service Uber Eats or trucking service Uber Freight. Both of those businesses may prove crucial in moving Uber into the black…
My Take: So these are the two sides to this story – the investor perspective and the human perspective. Drivers sleeping in cars while investors scrutinize the numbers still hoping there’s life in this stock. I’m not so sure – but stay tuned for our upcoming analysis on Uber’s earnings report soon.
Readers, what do you think of this week’s roundup?
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-John @ RSG