Uber Lays Off 400 From Its Marketing Team; Is Trump To Blame?

Ridehailing giant Uber has laid off 400 employees out of the 1,200 that make up its marketing departments across 75 branches, a week before it is supposed to announce quarterly report for Q2 2019. The mass layoffs come after Uber’s chief operating officer Barney Harford and chief marketing officer Rebecca Messina stepped down from their positions last month.

Uber announced a loss of $1 Bn in the first quarter of 2019 and the layoffs could be part of its efforts to streamline operations and reduce spending on people resources. Messina’s exit led to CEO Dara Khosrowshahi merging the company’s marketing, communications and policy teams under Jill Hazelbaker, SVP of marketing and public affairs.

Khosrowshahi, in a letter to Uber employees, wrote: “it’s never a good time to announce departures or changes like this, but with the IPO [initial public offering] behind us, I felt this was a good moment to simplify our org and set us up for the future.”

People, who had invested in Uber shares 3 years ago, have lost 15% of their money, and since then the company has also gone public, according to a report by Axios. In 2018, Uber spent $3.2 Bn or 28% of its revenue on sales and marketing, which was a 25% increase from 2017.

On the other hand, Uber rival Lyft spent $800 Mn on sales and marketing in 2018. The rivalry also took on a political shade in 2017 when then Uber CEO Travis Kalanick agreed to be an advisor to Donald Trump. This led to Lyft publicly calling out Uber over its alleged support for Trump’s policies including the immigration reforms that severely impacted several Uber and Lyft drivers.

Soon after, Kalanick stepped down from the Trump panel and the Uber founder was also booted out of his company in 2017. His replacement was Khosrowshahi, who is known to be a critic of Trump administration policies.

Even after Uber’s weak IPO debut, the company blamed Trump administration’s policies for the fall. The day Uber went public, Trump announced higher tariffs on Chinese imports, which hit the company’s stocks. The company settled at $41.57, much lower than its $45.00 per share IPO price and is currently trading at $ 43.88.

Political or not, Uber has been suffering ever since it became public in May 2019. The company has underperformed compared to the broader market and its rival Lyft. Three days after the Uber became public, it tanked 10.8% whereas Lyft dropped 2.4% and 5.8%, respectively.

The spiralling costs have now forced the company to lay off employees and that’s a sign that the stock price pressure is finally hitting the Uber top management.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.