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Uber slashing spending & hiring to better align with investor sentiment

Uber slashing spending & hiring to better align with investor sentiment
Uber slashing spending & hiring to better align with investor sentiment

Ride-hailing major, Uber, will reportedly be cutting back on spending and instead work on becoming a leaner business in order to address a ‘seismic shift’ in investor sentiment and market, as per the mail sent by CEO Dara Khosrowshahi to employees in the firm on Sunday.

In the email, Khosrowshahi wrote that he spent many days meeting investors in Boston and New York, and it has become overtly clear that the market is undergoing a seismic shift and that the firm needs to react accordingly.

Khosrowshahi added that Uber has to ensure its unit economics are working before expanding further.

To effectively address the changing economic sentiment, the company would be slashing down its spending on marketing and incentive while treating hiring as a ‘privilege’, meaning that the firm will be deliberate about when and where it will be increasing the headcount.

Uber is now the latest to enter to the growing list of tech companies that have warned of a slowdown in hiring.

Last week, Meta told its staff that it will be stopping or slowing the pace of adding mid-level and senior positions. Retail brokerage firm, Robinhood, also made an announcement that it will be cutting back 9% of its workforce.

Meanwhile, tech stocks have been falling sharply as economies attempt to recover from the Covid-19 pandemic. The Nasdaq Composite, which weighs mostly toward IT businesses, saw a fifth consecutive weekly decline last week.

Uber’s stock plunged by more than 11% during the start of the week.

Khosrowshahi stated that the firm will focus on attaining profitability on a free cash flow basis instead of adjusted EBIDTA.

He added that in terms of profitability, the mobility services firm has made much progress and set a target of $5 billion in Adjusted EBIDTA by 2024, but is now changing the ‘goalposts’.

Meanwhile, Uber’s major rival in the US and Canada, Lyft, has adopted a different approach. Last week, the firm announced that it will be increasing spending to bring in more drivers to the service amidst soaring gas prices.

Source credit: https://www.cnbc.com/2022/05/09/uber-to-cut-down-on-costs-treat-hiring-as-a-privilege-ceo-email.html

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Omkar Patwardhan

Omkar Patwardhan started his professional career in the hospitality industry. Having nurtured a deep-sated passion for words however, he found his way into content writing and now pens down articles for numerous websites, including News Origins, spanning the sectors of business, finance, and technology.