“Inflation” is one of the most talked-about headwinds for the equities market this year. Interestingly, though, Uber Technologies Inc (NYSE: UBER) says higher consumer prices are actually “helping” it with the supply side of things.
What’s Uber getting out of inflation?
For the mobility companies, a prominent challenge lately has been the shortage of drivers. Explaining how inflation helps fix that on CNBC’s “TechCheck”, CEO Dara Khosrowshahi said:
72% of U.S. drivers say a consideration of their signing up to drive on Uber was inflation. Life’s getting more expensive. They need to pay extra for groceries. So, the supply side, we may be actually benefitting from the inflationary environment.
Consumer prices eased a bit but still stood at a near forty-year high of 8.5% in July. Data for last month is expected on Tuesday – September 13th.
Wall Street continues to recommend buying Uber shares even though they’ve already climbed nearly 60% over the past three months.
Demand side is keeping strong as well
It’s not that the “demand” is concerning for Uber Technologies either. It’s also keeping fairly resilient in the face of inflation as consumers continue to spend more on services.
Another tailwind, as per the Chief Executive, is the pent-up demand after the release of COVID restrictions.
U.S. Open was record in terms of people going to it. So, more and more people are going out, spending on services, going out in the real world and that’s been a real tailwind for us against inflation.
In its latest reported quarter, the ride-hailing company had $382 million in free cash flow (source).
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