Uber has seen a 60% to 70% decline in bookings in Seattle in the past few days and is preparing for an “absolute lockdown/shutdown” of the city lasting at least two months, CEO Dara Khosrowshahi told analysts and investors — saying that the ride-hailing giant views the impact of the novel coronavirus on Seattle as an “archetype for a Western city.”
“Seattle was ahead of the curve of other cities just because of the nature of the outbreak there and how quickly they shut down,” Khosrowshahi said on a Thursday morning conference call.
At the same time, he said, the Uber Eats restaurant delivery business has been growing significantly in Seattle and other markets as restaurants follow state mandates to shut down normal operations and shift entirely to delivery and take-out.
Khosrowshahi sought to assure investors that Uber is positioned to weather the downturn, with about $10 billion in unrestricted cash as of the end of February. Uber’s stock is up more than 35% after the call.
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In overseas markets such as Hong Kong, where the novel coronavirus hit earlier, the company has seen its business start to recover quickly as the area has rebounded, he said.
“In terms of business impact, the situation remains highly fluid,” Khosrowshahi said. “Of course people sheltering in place means that they take fewer Uber trips. In more recently impacted markets like Seattle, we’re in the middle of watching this play out.”
Seattle and Washington state were the early epicenter of the U.S. outbreak, and companies and residents initially took voluntary steps to limit the spread of the disease at the urging of public officials. State and local officials have since closed schools, prohibited large public gatherings and ordered the shutdown of normal operations at restaurants and bars.
However, they have yet to institute a full “shelter in place” mandate, which would restrict all but essential and critical travel and movement around the city, as officials in the San Francisco Bay Area have done. Washington Gov. Jay Inslee said Wednesday afternoon that he didn’t believe it was yet time for such a move, although some experts disagree.
In a worst-case scenario, Khosrowshahi said, with an 80% decline in the company’s overall business and no recovery, Uber would end the year with about $4 billion in cash, in addition to the potential to access a $2 billion line of credit. In a more likely scenario, he said, the company envisions the crisis bottoming out in the second quarter, and starting to recover in the third quarter. That would leave Uber with about $6 billion in cash, he said. This is the scenario that assumes two months of effective shutdown in cities such as Seattle.
The company has offered financial assistance to drivers diagnosed with COVID-19.