As ride-hailing has gone down about 80% worldwide since the start of the pandemic, this is how the Dara Khosrowshahi company is looking to make up for the huge losses.
Uber has been hit hard by the pandemic. In the first quarter of 2020, the company lost $2.9 billion, its biggest loss in three quarters. Amid the widespread shutdown orders, the company of CEO Dara Khosrowshahi said it would lay off 3,700 full-time employees, or about 14% of its workforce, but even amid the crisis, CEO Khosrowshah saw “some green shoots driving restrained optimism”, mostly because revenue for its Uber Eats division rose 53% in that same time. This meant there is a way.
With rising coronavirus cases in states like Texas, New Mexico and California, Uber has begun requiring drivers and passengers alike to wear masks during trips indefinitely in Canada and the United States with a campaign called “No mask. No ride” in an effort to carry on the company based on guidance from the Centers for Disease Control and Prevention. The company also added selfie technology for drivers in May that detects whether a driver is wearing a mask before they start a shift. This technology also also sends notifications to riders reminding them to wear a face covering before their driver arrives. More than a million drivers have gone through mask detection already, the company announced, according to USA Today. Lyft and other ride-hailing companies have joined Uber in announcing new measures to take on the “new normality” in traveling, one of the industries set to reform itself completely. Lyft and airlines have also has joined Uber in adopting new safety measures with a mask requirement in all 50 states in coronavirus prevention efforts.
The great leverage for Uber comes from its meal delivery division, Uber Eats, which has become the best way to make up for loss, acquiring food delivery service Postmates in a $2.65 billion all-stock purchase to give itself a much-need jolt. According to The Verge, by purchasing Postmates, Uber can improve its marketshare to 37%, from its current position of 29%. Postmates, which is headquartered in San Francisco, helped revolutionize the food delivery segment when it launched in 2011. The company had been planning to go public in October but reportedly told its advisers market conditions were suboptimal and delayed the filing. Fox Business reported recently that the plan is back in motion, with the food delivery service planning to file paperwork for an initial public offering within days. Together, reports The New York Times, Postmates and Uber Eats would have a 37% share of food delivery sales in the United States, according to Edison Trends, which tracks credit card spending. DoorDash would remain the largest player with 45%, while Grubhub would have 17%.
Daniel Ives, an industry analyst with Wedbush Securities, said in a note to clients that the deal was a “defensive and offensive acquisition in the food delivery space for Uber at a time with its core ride-sharing business seeing massive headwinds in this COVID-19 pandemic.”
Before the deal, NBC News adds, with Uber was finalized, there was speculation Postmates would become a publicly traded company. In February 2019, it confidentially filed for an initial public offering to make its stock available on a public exchange but hadn’t moved forward with the process. Uber went public in May 2019.