AP/Gene J. Puskar
- People who drive for Uber or Lyft for a living are seeing demand for their services fall off a cliff in many major urban areas due to restrictions in place to prevent the spread of the coronavirus.
- Uber's CFO says that in some areas, like Seattle, rides have tanked by about half.
- He's confident that demand for rides will bounce back quickly by watching the market come back to life in Hong Kong, which recently lifted its lockdown.
- Earnest Research, which analyzes consumer credit card spend shows some bright spots, too, where rides are still doing well.
- Visit Business Insider's homepage for more stories.
On Monday, Uber told its 22,000 employees that it had put a hiring freeze in place until the end of May, to contain costs while the coronavirus crises cyclones through the world.
The company has seen usage of its primary service, rideshares, decline by as much as 50% in locked-down cities like Seattle, where employees are working from home and retail, entertainment and non-essential services are shuttered, Uber CFO Nelson Chai said Monday on CNBC's Squawk Box.
Uber Eats, which accounts for about 25% of Uber's gross bookings, has maintained demand, Chai said. While eat-in restaurants are being banned in some cities, or being avoided on others, food delivery service is still allowed just about everywhere. In fact, Uber has announced a plan to help 100,000 restaurants stay alive by ditching its delivery fees and increasing marketing.
Chai was confident that Uber would bounce back quickly for two reasons: One is because he's looking at Hong Kong, which recently lifted its lockdown. Rides in Hong Kong are quickly bouncing back from being down by 45% to down by 30%, Chai said, as people slowly get back to a more normal routine.
The other is because the company has plenty of cash on hand. "It's not about profits and losses it's about liquidity in order to make it through this crises," he said. Chai said the company has $10 billion cash on hand, plus payments on the company's long-term debt won't start coming due until 2023.
Lyft, which declined comment on the fate of its rideshare business, is also suffering, according to data on consumer credit card spending analyzed by Earnest Research.
Both Uber and Lyft have promised to pay drivers who have the virus or have been ordered to quarantine up to two weeks pay, although it didn't say how much that would be.
But the worrisome part is that such an offer doesn't help all the other drivers who depend on rideshare demand for a living.
If there's a silver lining in these numbers, it's that when factoring in larger urban areas (not single cities) Earnest's Research shows that demand has not cratered everywhere for everyone. In the New York Tri-state area, for instance, ridership was up as people avoid more crowded public transportation.
Earnest's data shows that the locked-down Seattle area is down the most for both companies but that the New York area, as of last week, was still using rideshare services. This can be expected to dip as the Tri-state area increases its restrictions to slow the spread of the virus.
Here's the latest data on how rideshare workers are impacted by the virus as of last week, based on core based statistical areas (CBSA), which refers to designated regions.
Are you an Uber or Lyft insider with insight to share? Contact Julie Bort via email at jbort@businessinsider.com or on encrypted chat app Signal at (970) 430-6112 (no PR inquiries, please). Open DMs on Twitter @Julie188.
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Axel Springer, Insider Inc.'s parent company, is an investor in Uber.
