The US firm has a well-diversified business model which helped it navigate the pandemic much better than ride-hailing rivals, writes Victoria Scholar.
Uber Technologies Inc (NYSE:UBER) reported first-quarter revenue of $8.82 billion (£7 billion), ahead of expectations for $8.72 billion. Quarterly gross bookings grew 19% to $31.4 billion or 22% on a constant currency basis. The ride-hailing app reported a quarterly loss per share of $0.08, beating forecasts for a loss of $0.09. Uber Eats has been successfully broadening its offering, shifting more towards alcohol and groceries to help navigate the economic storm clouds as the softening consumer looks to make cutbacks on non-essential spending such as takeaways.
Like a company that sells ice creams and umbrellas, Uber has a well-diversified business model with its taxi and food delivery offering. This helped Uber to navigate the pandemic much better than ride-hailing rivals, thanks to its food delivery business Uber Eats, which was a stay-at-home Covid-proof winner while travel ground to a halt.
This year, both taxi services and food delivery are likely to face headwinds from the challenging macroeconomic backdrop with slowing economic growth, cost inflation pressures and weak real wage growth. However, this has boosted demand for jobs in the gig economy with a greater supply of potential workers looking for supplementary income who are willing to take on flexible roles at Uber.
For investors, shares suffered from the peak in April 2021 to the trough in July 2022 caught up in the US ‘tech wreck’ on the back of rising inflation and the Fed’s aggressive tightening path. As a result, Uber has been focusing on cutting costs, which has helped to reinvigorate investor confidence. Off the lows, Uber has been rebounding with gains extending pre-market this morning. The stock is up over 29% in 2023 until yesterday’s close and up a further 8.5% today. The read across is also providing a boost to shares in ride-hailing rival Lyft (NASDAQ:LYFT).
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