✨ Time To Hail Uber’s Growth Ride?

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Hey Global Investor! Here’s what you need to know before the US markets open.

Market Snapshot 📈

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Uber: Riding The Hail Storm?

The global economy may be staring at a recession. Companies of all shapes and sizes may be fretting about what’s in store for them as central banks have started belt-tightening. However, Uber’s Dara Khosrowshahi is all smiles. What gives?

Contractors Are (Or) Employees?

What a difference two years make! During Covid-enforced lockdowns, it seemed like the bottom had fallen off Uber’s plans. And then came the Prop 22 fiasco. Gig drivers felt short-changed when their earnings dried up during Covid with no healthcare benefits etc., to speak of.

Uber and its brethren had argued drivers are not employees but contractors and don’t qualify for benefits. The state legislature came to the drivers’ aid and passed Assembly Bill 5, which required Uber and its ilk to categorize their drivers not as contractors but as employees.

As a way to thwart this development, the cab aggregators went straight to the electorate ahead of November 2020 elections and spent $220M, highlighting the fact that paying these benefits to the drivers would mean increased fares for the riders. This proposition was called Prop 22.

59% of the voters balked at the possibility Uber fares increased and voted to grant an exception to app-based transportation and delivery companies from adhering to Assembly Bill 5. Uber just about heaved a sigh of relief when a judge ruled Prop 22 unconstitutional and reinstated Assembly Bill 5, much to the chagrin of the ride-hailing app companies.

While Uber weighed its options, business continued to nosedive. Last year this time, its adjusted EBITDA was a paltry $8M. And a gloomy economic outlook to boot. Yet, the pandemic was abating, and people started stepping out a whole lot more. And used Uber to get around.

Riders Of The Lost Ark!

When Uber reported some “Shock & Awe” results for Q3 2022:

  • Revenue: $8.34B (up 72% Y-o-Y)
  • Adjusted EBITDA: $516M (up 6,450% Y-o-Y)
  • Net income: Loss of $1.2B (Vs. loss of $2.4B Y-o-Y)
  • Gross bookings for rides: $13.68B (Vs. $9.88B Y-o-Y)
  • Gross bookings for delivery: $13.68B (Vs. $12.8B Y-o-Y)

The numbers are a far cry from the stressful situation a year ago. To give more reasons for the investors to cheer, analysts projected its overall adjusted EBITDA for 2023 will nearly double to $3.22B Vs. $1.61B that’s projected for this year. Revenue for the year is expected to come in at $31.8B this year and $37.4B in 2023.

The numbers (and the projections) have been a much needed respite for the beleaguered ride-hailing giant. Last month the Biden administration jumped into the fray with the Labor Department proposing a new rule that will classify gig workers not as contractors but as employees.

CEO Khosrowshahi, however, is optimistic that Uber will prevail and is continuing to engage with lawmakers to see how it can come to an amicable agreement about categorizing its drivers. These efforts notwithstanding, the company has already been forced to treat drivers as employees in the UK since last year by the UK Supreme Court.

All said and done, while tech stocks have taken a beating owing to a barrage of concerns on the economy, Uber’s results in the face of those same concerns lifted it up. Results were announced on Monday and Tuesday, the stock jumped 12%. It seems the ride the investors were trying to hail for the past couple of years has finally arrived.

Market Reaction
UBER ended at $28.73, down 0.28%.

Company Snapshot 📈

UBER $28.73, -0.08 (-0.28%).

Analyst Ratings (44 Analysts) BUY 91% HOLD 09%  SELL 00%

Newsworthy 📰

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  • Few More To Go: Virgin Galactic CEO outlines remaining steps before commercial spaceflight services begin next year (SPCE +2.18%) (Premarket)
  • Delivering the Goods: DoorDash shares surge on stronger-than-expected earnings (DASH +11.11%) (Premarket)

Later Today 🕒

  • Berkshire Hathaway Inc. Earnings (BRK.A)
  • Duke Energy Corporation Earnings (DUK)
  • Enbridge Inc. Earnings (ENB)
  • Dominion Energy Inc. Earnings (D)
  • The Hershey Company Earnings (HSY)
  • DraftKings Inc. Earnings (DKNG)
  • 6:00 PM GMT: Nonfarm Payrolls & Unemployment Rate

Today’s Fun Fact

People love to talk to cab drivers. The only scientific reason for this might be the old saying about how people find it easier to talk to a total stranger rather than someone they know.

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