Dara Khosrowshahi, Uber CEO, sent an elongated letter to staff on Sunday that addresses some of the myriad evolutions the company will be facing in the current state of dwindling tech stock prices. The Uber head specifically denoted changes to spending in both marketing and incentives, as well as making hiring a "privilege."
The email, as spotted via CNBC, focuses on the advancing of Uber's profitability in the face of, as Khosrowshahi himself writes, "a seismic shift" in investor considerations. Given the lifting of lockdowns across the world and the diminishing effects of the pandemic, the once high-priced tech stocks are now experiencing a steady decline.
"After earnings, I spent several days meeting investors in New York and Boston. It's clear that the market is experiencing a seismic shift and we need to react accordingly," Khosrowshahi wrote.
Of major importance to the firm is making hiring a "privilege," or limiting the potential of adding new hires. It wouldn't be the first to express such alterations, especially in the tech world, as Robinhood slashes 9% of its staff, in addition to Meta itself stopping altogether the adding of senior and mid-level employees to its brand.
On the surface, while this may make Uber careers far more difficult to achieve, it will only add to the viability of the brand and the potential for those already working for the company in the first place. It will also be far more conscious of where and when it will hire to avoid unnecessary additions and be more thorough in its hiring process. The Uber CEO likewise denoted another major element for the company as being "more hardcore about costs across the board."
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"We have to make sure our unit economics work before we go big. The least efficient marketing and incentive spend will be pulled back," Khosrowshahi wrote.
Despite the dwindling of tech stock prices, Uber has seen some positive alterations to its overall business, thanks due in large part to the decrease in lockdowns. With more people outside, traveling, and on-the-go travelers, Uber has seen some demand for its ride-sharing program. Even amid the pandemic, Uber Eats too surged to ever-necessary heights, but a $5.9 billion loss in the first quarter proves change is necessary.
Khosrowshahi indicated that the company will now move off from focusing on adjusted earnings and instead maintain a more vigilant outlook on a free cash flow profitability potential. Investors, the Uber CEO relayed, are pleased with the growth but obviously want more. The Uber Eats portion specifically "should be growing even faster," as well as the firm's freight business "needs to get even bigger," notes Khosrowshahi.
"We have made a ton of progress in terms of profitability, setting a target for $5 billion in Adjusted EBITDA in 2024, but the goalposts have changed. Now it's about free cash flow. We can (and should) get there fast," the Uber executive wrote.
Ride-sharing and taxi service rival Lyft highlighted a dramatic pivot in the face of Uber's new cost-cutting parameters. As Lyft stock dropped by 30% following its first-quarter report, Lyft also proved that cost increases, specifically in the form of driver incentives due to gas prices, will be its main focus moving forward.
Although both firms have faced some issues in the form of dwindling drivers, Uber proves to be at an all-time high following the pandemic, making hiring for the company a lot less important. Even with these changes made to its business, Uber stock sees a 6.60% drop as of writing on Monday, May 9th, as the entire stock market experiences a downward trend due to an intensified sell-off spree.
