Uber is planning to cut down its spending this year due to a "seismic shift" in investor investment, as revealed by CEO Dara Khosrowshahi in an email to employees who appeared on CNBC.

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CHICAGO, ILLINOIS - MAY 09: Travelers wait for an Uber ride at Midway International Airport on May 09, 2022 in Chicago, Illinois. 

The service provider company will be slashing its spending on marketing incentives, which are also known as Uber's multiple perks for customers and drivers that involve sign-up bonuses and ride discounts. 

Khosrowshahi also revealed that new hiring at the company will be treated as a "privilege."

"The least efficient marketing and incentive spend will be pulled back. We will treat hiring as a privilege and be deliberate about when and where we add headcount. We will be even more hardcore about costs across the board," the CEO wrote in the email.

Read Also: Uber and Lyft Drop Face Mask Requirements on Ride Sharing, As Per CDC 

The Culprit: Coronavirus Pandemic

Tech stocks have notably decreased ever since, and the culprit behind this is the coronavirus pandemic. Investors seem to have lost their confidence in these stocks since the last week just recorded its fifth consecutive weekly plunge, which is the longest losing streak since 2012, according to the Nasdaq Composite.

Hence, this prompted Khosrowshahi  to make some drastic changes in the company as well.

This makes Uber one of the tech companies that has recently warned of a decline in hiring. Facebook owner Meta, for example, announced last week that it would slow or stop its hiring due to the decline in its revenue growth. While Robinhood will also decrease its workforce by 9%.

In fact, Uber shares were down more than 11% on Monday. While its stock reached a new 52-week low earlier in the session, which has jumped down more than 45% year to date.

The company announced that it will now be focused on having profitability on a free cash flow basis instead of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). 

The CEO said that they have already made a "ton of progress" in profitability, which sets a target for $5 billion in Adjusted EBITDA in 2024.

"GO GET IT!"

It is worth noting that Uber's revenue still increased by double in the first quarter to $6.9 billion. This is due to the increasing demand for its rides now that the Covid restrictions have been relaxed. The company also gained from its Eats food delivery which was a popular service during the pandemic.

But due to its equity investments, Uber still reported a $5.9 billion loss in the period.

Despite the promising growth of Uber Eats, Khosrowshahi said it should be growing even faster now and added that their freight business should serve as an opportunity for them to grow bigger.

Khosrowshahi remained hopeful as he wrote in the letter, "let's make it legendary. GO GET IT!"

Related Article: Uber Crypto Payment Feature To Happen? CEO Explains Why They Still Can't Accept Cryptocurrencies 

This article is owned by Tech Times

Written by Joaquin Victor Tacla