Uber Technologies Inc. Chief Executive Dara Khosrowshahi has told staff in an email that the company plans to slash costs on marketing and incentives and will treat hiring as a “privilege.”

The email, which was sent to staff on Sunday, according to CNBC, has Khosrowshahi saying the business needs to address a “seismic shift” in investor sentiment.

“After earnings, I spent several days meeting investors in New York and Boston,” Khosrowshahi said in the email. “It’s clear that the market is experiencing a seismic shift and we need to react accordingly.”

That shift comes down to a change not only in tech stocks but in the broader market amid growing concerns about the long-term outlook for the U.S. economy, amid 40-year highs in inflation and increasing interest rates.

The decision came after Uber announced its quarterly earnings last week and reported a $5.6 billion loss. To be fair to Uber, the loss was the result of adjusted valuations on its investments in Aurora Innovation Inc., Grab Holdings Inc. and Didi Chuxing Technology Co. as well as $359 million in stock-based compensation expenses. But it’s still not a great headline figure.

Without the additional costs, Uber achieved adjusted earnings of $168 million, a $527 million improvement from a year ago.

The decision by Khosrowshahi for Uber to cut costs, particularly on driver promotion, contrasts to its main rival in the U.S. market — Lyft Inc. In Lyft’s last earnings report, the company said it was committed to spending more on driver incentives and marketing in the second quarter.

In an earnings call, Lyft CEO Logan Green said that despite having 40% more active drivers in the first quarter year over year, “we want to continue improving service levels in preparation for further growth.” Rides are only about 70% recovered compared with the fourth quarter of 2019, so Lyft is expecting to need more drivers as the post-COVID recovery continues.

Uber would likely be facing similar issues, although the two companies do vary in one major aspect — food delivery. Uber Eats has quickly become a popular service where it operates and typically accounts for more revenue and business for Uber than its ride-hailing business, but it isn’t as profitable.

Investors in Uber didn’t really care for the news. The company’s share price dropped almost 12% in regular trading, to $23.05.

Photo: Pixabay