Uber Technologies Inc. (NYSE: UBER) rose 3.54% Monday after a report that the ride-sharing company would further cut costs. The S&P 500 was up 3.15% as the market rallied.

The coronavirus pandemic has pummelled Uber as stay-at-home orders severely cut usage. Before COVID-19, the company was seeing ridership increases. For Q1 2020, Uber said the total number of trips increased 7% year over year to 1.66 billion.

But that changed in mid-March, and the company saw rides decline by 80% in April. Uber reported a loss of $2.9 billion in the first quarter, after losing $1 billion in the same period a year ago.

Most analysts rate Uber stock a Buy. Closing Monday at $33.62, the stock price has varied from $13.71 to $47.08 in the last 52 weeks, with a consensus target price of $43.75.

This ‘Damn Virus’

In its latest move, the San Francisco-based company is cutting 3,000 employees, according to Business Insider. This follows the elimination of 3,700 jobs, about 14% of its workforce, just a few weeks ago.

Altogether the cuts represent about a quarter of Uber’s staff. These figures don’t include drivers, who are considered independent contractors, not direct employees of Uber. The legal work status of drivers is the subject of a lawsuit recently filed by the state of California against Uber.

Competitor Lyft Inc. (NASDAQ: LYFT) said it would cut 17% of its staff, along with some pay cuts and furloughs.

In an email to staff Monday, Uber CEO Dara Khosrowshahi said he struggled with the decision. “Our balance sheet is strong, Eats is doing great, Rides looks a little better, maybe we can wait this damn virus out … I wanted there to be a different answer,” he wrote. “Ultimately, I realized that hoping the world would return to normal within any predictable timeframe, so we could pick up where we left off on our path to profitability, was not a viable option.”

To save money, Uber also said it is closing 45 offices around the world and cutting back on non-core businesses. The company is winding down its Incubator project, which launched last September. The project encouraged employees and outsiders to develop new applications on top of the Uber platform.

Also shelved is Uber’s AI Labs, which has been doing research for several years. With its AI research, Uber has invested heavily in the notion of an autonomous vehicle, much like the driverless wonder cars seen in the recent season of “Westworld.”

And the company is pursuing strategic alternatives for Uber Works, a relatively new business that seeks to pair workers with employers.

This week’s downsizing will cost Uber somewhere between $175 million and $220 million, according to an SEC filing. That includes up to $140 million in severance and termination costs. The layoffs from a few weeks ago were expected to cost up to $40 million.

The company’s board of directors agreed to forego 100% of their annual cash retainer for serving for the remainder of 2020. Likewise, Khosrowshahi is waiving his salary for the rest of the year.

Uber said the cuts, “together with actions already taken to reduce the Company’s overall cost structure, were designed to generate an aggregate cost savings of at least $1 billion annually versus the company’s original Q4 2020 planned cost structure.”

Food Delivery Is Hot

As a recovery move, Uber is rightly focusing on Uber Eats, its food delivery service. In its Q1 results, Uber said Uber Eats revenues increased 53% to $820 million. That compares to the larger rides service, which accounted for $2.47 billion in revenue.

While Uber Eats is growing, “the business today doesn’t come close to covering our expenses,” Khosrowshahi said. “I have every belief that the moves we are making will get Eats to profitability, just as we did with Rides, but it’s not going to happen overnight.”

The company is also reportedly trying to acquire Grubhub. The food delivery business has gained new attention and customers as people across the country have been in lockdown because of the coronavirus pandemic. There are four major U.S. players in the industry — Grubhub Inc. (NYSE: GRUB), Uber Eats, Postmates and DoorDash — and all of them lose money.

The industry is highly competitive, with companies offering discounts to gain and keep customers. So consolidation wouldn’t be surprising, especially in a troubled economy. Analysts estimate an Uber-Grubhub merger could save hundreds of millions of dollars, thanks to employee cuts and eliminating redundancies in advertising and other areas.

The Wall Street Journal reported Sunday that Grubhub rebuffed Uber’s offer of 1.9 shares for each Grubhub share. GrubHub had wanted 2.15 shares. The newspaper said negotiations are continuing.

Any deal could face regulatory resistance since a merger would likely result in job losses. That’s not something Washington wants to see during a period of high unemployment.

In another play outside of rides, Uber recently said that it is leading an investment round of $170 million in the scooter-rental company Lime. Alphabet, GV and Bain Capital are a few of the big-name stakeholders in Lime. Ultimately, this investment round valued Lime at roughly $400 million, according to Bloomberg.

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