How Uber is navigating the biggest reopening challenges as ride-sharing soars

Myles Udland
·3-min read


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Tuesday, April 13, 2021

Demand up, supply down, but trends still improving 

For over a year now, investors have been cycling through various plays on an economic reopening. 

But whether you're betting on cruise lines, hotels, the housing market, or a restaurant rebound, the core idea comes down to believing a few things. That boils down to consumers behaving much as they did before the pandemic, while keeping some new habits in place — and that only regulations or supply stand in the way of a full recovery.

And all of these themes were present in Uber's (UBER) Monday morning announcement about the state of its business. 

"[In] March 2021 total company gross bookings reached the highest monthly level in the company’s nearly 12-year history," the company said Monday. 

Uber added: "The company’s Mobility business posted its best month since March 2020, crossing a $30 billion annualized gross bookings run-rate, with average daily gross bookings up 9% month-over-month. The company’s Delivery business set another all-time record, crossing a $52 billion annualized gross bookings run-rate in March, growing more than 150% year-over-year."

In the fourth quarter, Uber's annualized Mobility revenue run rate was closer to $25 billion, with Delivery running closer to $40 billion. And so this piece of Uber's update shows both the retention of a pandemic-era habit to order in more — even amid a continued and growing desire among consumers to venture back out into the world as the vaccine rolls out and more COVID-related restrictions are relaxed. 

But with this resumption of activity also comes continued pressure, in the face of a growing service sector labor crunch.

"As vaccination rates increase in the United States, we are observing that consumer demand for Mobility is recovering faster than driver availability, and consumer demand for Delivery continues to exceed courier availability," the company added. "On April 7, Uber announced that it is increasing investments in driver incentives to improve driver availability in the near-term. We continue to believe that Uber is on track to reach quarterly Adjusted EBITDA profitability in 2021."

The main thing holding back Uber's business, in other words, is supply. And so whether it means companies can't meet demand because of mandated limits on capacity in a restaurant, or because they can't find enough workers, the net effect is that the re-opening right now hinges on a simple economic imbalance. 

Investors, however, reacted positively to Uber's announcement, with shares of the company gaining as much as 3.5% during Monday's session. The company also reiterating its long-held 2021 adjusted EBITDA profitability target certainly didn't hurt. But the market's reaction shows that when it comes to re-opening themes, investors are still asking just one thing of companies: Are you still growing? 

Delayed timelines, higher costs, and other capacity constraints are generally accepted by investors right now. No one thinks most businesses won't have problems in the months — and perhaps years — ahead. And as a result, short-term bad news can easily be overcome by continued longer-run good news. 

In other words, the only investor question that needs answering today is whether there remains higher demand for a company's goods and services tomorrow than what existed yesterday. The answer for Uber right now is yes. 

Still, how other companies answer this call will be a key theme to watch in first quarter earnings season over the next few weeks. 

By Myles Udland, reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

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