Uber recently announced it has expanded delivery services to include retail items and personal care packages. The company also revealed it won approval to pursue $810 million in government contracts. The firm has been working to increase its revenue because of COVID-19’s devastating impact on its ride-hailing business.
Uber New Segments and Government Contract Approval
In an April 20 press release, Uber declared it launched two new delivery segments, Direct and Connect.
Uber Direct gives consumers in select markets the ability to order goods from certain retailers. In New York City, users can order over-the-counter medication via online merchant Cabinet while Australian subscribers can buy pet supplies from local shops and veterinarians. The service is also supplementing CTT, the Portuguese national Postal Service.
Uber Connect allows individuals in 25 cities to send packages to their friends and family. The company framed the contactless courier service as a way for people to give their loved ones care packages, including board games and toiletries. At present, the corporation’s same-day personal delivery option is only available in Australia, Mexico, and the United States.
Earlier this month, Uber announced it partnered with European and South American markets to provide grocery transportation. The firm’s rapid expansion of services follows reports its ride-hailing service has declined by 50 percent due to the spread of COVID-19.
Bloomberg reported Uber won U.S. General Service Administration (GSA) approval to bid on nearly a billion dollars’ worth of government service contracts. Politicians regularly tap companies like Uber for personal transport and campaign event catering. In fact, the GSA estimates federal agencies will spend $810 million on ride-hailing transportation through 2025, revenue the beleaguered company badly needs.
Coping with a Global Crisis
Last week, Uber withdrew its 2020 financial guidance because of the coronavirus pandemic’s effect on its core business. The company also announced it would write down $1.9 billion to $2.2 billion in minority investments this year. The firm did not specify which holdings prompted the move, but it maintains stakes in Chinese online taxi service Didi Chuxing and Singapore and transportation firm Grab.
The San Francisco based corporation also detailed the financial impact of its recently created driver assistance fund. Two weeks ago, the company stated it would provide monetary support to workers diagnosed with or quarantined because of COVID-19. The firm expects to spend $17 million to $22 million on the initiative in the first quarter and $60 million to $80 million in Q2.
Despite the one-two punch of the write-down and capital expenditure, Uber’s stock did not experience a major decline. Indeed, the firm’s share price rose by 8.5 percent after making the disclosures because its shareholders expected even worse news. Moreover, the company’s recent announcement that it has $4 billion in cash reserves has placated its investors.
With its robust financial resources and aggressive COVID-19 response, Uber will likely emerge from the current global health crisis in good shape.