How coronavirus is impacting the ride-sharing space
Yahoo Finance's Myles Udland, Melody Hahm, and Jen Rogers discuss how the ride-sharing space is doing amid coronavirus.
Video Transcript
MYLES UDLAND: Melody, let's talk a little bit about the layoff news that's come out of Silicon Valley in the last 24 hours. Uber confirming this morning 17% of its workforce would be laid off, or 1,700 workers. I think it's 14%. You can correct me on the numbers.
You got the news yesterday from Airbnb, a quarter of their workforce being laid off. Lyft reporting earnings tonight. There has been rumors that they will cut staff.
It really seems like this is the reckoning. Even though no one thought it would happen from a pandemic, but that since 2015, conversation of these consumer names being overheated, it feels like this is the moment.
MELODY HAHM: Yeah, let's go through the numbers quickly. So 3,700 jobs lost at Uber. That comes out to around 14% of staff total. Lyft actually announced layoffs last week, 1,000 jobs, which amounts to about 17% of the total staff. And then, of course, the-- that Airbnb news yesterday, 25% of staff, or 1,900 jobs.
So all of those numbers you mentioned are somewhere in there. But it just shows kind of the breadth and magnitude that it's really hitting the sharing economy. And we've talked about it on this program before, that a lot of this consumer behavior that we accepted as normal, as ubiquitous, as this is the way things are going to be, clearly the pandemic upended that.
The entire concept of sharing anything has been completely frowned upon. And even Dan's hit on Disney kind of shows the social distancing will take-- will continue to take effect, and will be a prolonged situation. And we cannot expect a snap back anytime soon, which is something that a lot of us on the panel had discussed even two or three weeks ago as potentially possible. I think any glimmer of hope in that regard has definitely dissipated.
And just kind of broadening out a little bit, even looking at layoffs overall in the tech space, 38,000 people have been laid off with tech startups. That qualifies as the Silicon Valleys of the world. That includes Lyft, Uber, and Airbnb here, according to layoffs.fyi, which has kind of been a leader in documenting and tracking a lot of these layoffs.
And unfortunately, Myles, I don't think this is the end of it. We heard from Dara Khosrowshahi, the CEO of Uber back in March, saying that it is a dire situation. I think the one silver lining that you can possibly make from Uber is that they have such a global reach, and so a lot of those markets that were hit early on in the same way that Disney is trying to reopen Asia first, we'll see that with Uber. Unfortunately, though, Lyft is not in a similar category, as they only operate in North America. So as we can anticipate, maybe this is one of those scenarios where Lyft and Uber will not move together in lockstep, although we have seen stock action kind of mirroring each other.
JEN ROGERS: Hey, Melody, one thing I'm curious if you've been hearing, talking to people myself, I know, we've talked a lot about sort of the inequality in what kind of jobs have been lost so far overall, you know, who is getting furloughed just in the general economy. In the microcosm of these companies as well, you know, first we saw contractors. Then in Uber right now, it's like a lot of the customer service people. You know, it's not so much the engineers.
And there already was this sort of caste system, these two different parts of these tech companies. And it seems one part of them is still doing OK. And the layoffs are inordinately hitting sort of the lower-paying jobs. Is that something that you've seen?
MELODY HAHM: Exactly, Jen. You kind of hit it right on the head. Support and recruiting are the two major categories that are being affected at both Uber and Lyft. And as you mentioned, some of those driver service centers that were responsible for recruiting people-- and if you recall, even four or five years ago, there were lines at those centers in New York City for people who were so desperate to become Uber drivers-- those are shutting down. So that's about 40% of all of their service centers around the world will be closed, which just shows that there is no appetite.
And then kind of looking at the gig economy at large, AB-5, Assembly Bill 5 here in California, which would classify all of these drivers as full-time employees, as we know, Uber and Lyft have filed a lawsuit against the State of California. The attorney general of California is saying, hey, you have to implement this. So we should expect that to come up on the earnings call today with Lyft as well as Uber tomorrow.
MYLES UDLAND: Yeah, certainly, again, all these stories are just beginning. But what happens, and I think to Jen's point, about the engineers, and the split between the blue-collar workers and white-collar workers, as it were, at these companies. That divide just starting to make itself known.
