In a piece of recent news, Uber is cutting spendings and focusing on becoming a leaner business to address a ‘seismic shift’ in investor sentiment.

Seismic Shift in Investor Sentiment

In a mail from Uber CEO Dara Khosrowshahi addressed to employees and obtained by various media outlets, it was stated that the company will focus on a seismic shift. The mail read: “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.”

Tech stocks have plunged sharply from the highs of the coronavirus pandemic, as investors fret over the prospect of an end to the era of cheap money that defined a historic bull market. The Nasdaq Composite recorded its fifth consecutive week of declines last week, its longest weekly losing streak since 2012.

To address the seismic shift in economic sentiment, the ride-hailing firm will slash spending on marketing and incentives and treat hiring as a “privilege,” Khosrowshahi said. He further wrote, “We have to make sure our unit economics work before we go big. 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.”

Uber’s Cost-Cutting Strategy

The call for a seismic shift makes Uber the latest tech company to warn of a slowdown in hiring. Facebook parent company Meta last week told staff it would stop or slow the pace of adding midlevel or senior roles, while Robinhood is cutting about 9% of its workforce.

Uber shares sank about 2.5% in U.S. premarket trading. The stock is down more than 40% year-to-date. Uber will now focus on achieving profitability on a free cash flow basis rather than adjusted earnings before interest, taxes, depreciation, and amortization, Khosrowshahi said.

Uber’s revenues more than doubled to $6.9 billion in the first quarter, as demand for its rides business rebounded thanks to a relaxing of Covid restrictions. The company has relied heavily on its Eat food delivery unit to boost sales in the pandemic. Still, Uber also posted a $5.9 billion loss in the period, citing a slump in its equity investments.

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