It may still be too early to make an assessment of the losses the companies will have to bear due to the lockdown caused by the COVID-19 pandemic. Cab aggregator Uber has tried to project certain figures which the company claims will be the impairment charge it will have to make in its books for the first two quarters of 2020. Uber expects to take a hit of $2.2 billion as impairment charge in the first quarter along with a decline in revenue by $17 million.
While the company feels the first quarter impairment may be between $18 million and $22 million, the second quarter could be almost triple or even four times this at $60 million to $80 million. The real lockdown in most US cities would have started around the middle of March. This means there were operations for the most of the first quarter. The second quarter will definitely be different. The month of April is as good as lost as far as businesses are concerned, and that includes Uber. If there is a partial lifting of the lockdown by May and if the cabs are permitted to be plied by the local authorities, with several restrictions, then there is some improvement expected. It may be safer to assume that the third and fourth quarters could see much better levels of activity, but there is no dearth of people who say things will never be back to where they were before the lockdown.
Uber has also incurred huge expenses by offering financial assistance to its drivers and delivery executives. These will have to be added to the expenses column for the first quarter and perhaps the second quarter as well.
The company says the impairment charge would be against the carrying value of some of the company's minority equity investments, due to the impact of the pandemic on the estimated value of those entities. More clarity may emerge when the company will declare its results for the first quarter on May 7.