COVID-19: Uber withdraws 2020 guidance, to write down about $2bn

Ride-hailing p latform , Uber said it has withdrawn its f i nancial guidance for 2020 and plans to write down about $ 2 billion in investments after the coronavirus pandemic upended the ridehailing business.

The San Franciscobased company said the writedown of its minority investments will range from $ 1.9 billion to $ 2.2 billion. A writedown is the accounting term used to describe a reduction in the book value of an asset, due to economic or fundamental changes in the asset.

Uber holds shares in various ride- hailing and food delivery businesses around the world. The company valued holdings in China’s Didi Chuxing and Southeast Asia’s Grab at a combined $ 10.3 billion at the end of last year. It didn’t identify which investments were driving the charge.

A financial assistance program created by the company for drivers and delivery people coping with the effects of the virus will have a marginal impact on revenue. The result will be a $ 17 million to $ 22 million reduction in that quarter and $ 60 million to $ 80 million in the second quarter, Uber said.

However, shares rose as much as 8.5percent in extended trading after Uber’s statement Thursday. Investors had been bracing for much worse. The stock took a nosedive in early March when the virus was spreading throughout the U. S. and Europe, but it has since recovered some of those losses. Uber assuaged many shareholders last month in a call with analysts drawing attention to its cash cushion of at least $ 4billion.

Rides have fallen by as much as 70percent in some of the hardest- hit cities, Uber has said. But the company could offset some of that shortfall with food delivery, which is experiencing a surge in demand as people stay at home.

Uber suspended its operation in Nigeria as a result of the lockdown and restrictions that were announced by both the Federal Government and some State Governments.

Uber is scheduled to release its quarterly report on May 7. “Given the evolving nature of Covid- 19 and the uncertainty it has caused for every industry in every part of the world, it is impossible to predict with precision the pandemic’s cumulative impact on our future financial results,” the company said in a statement.