Uber CEO: Inflation could also be serving to firm appeal to drivers

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The U.S. could also be grappling with stubbornly excessive inflation, however a minimum of one CEO sees a silver lining to growing costs.

Uber CEO Dara Khosrowshahi pointed to elevated residing prices as one cause why extra individuals have been selecting to drive for Uber: “72% of drivers within the U.S. are saying that one of many concerns of their signing as much as drive on Uber was truly inflation,” he instructed CNBC’s TechCheck on Monday.

“Life is getting costlier, they should pay additional for his or her groceries,” he said, “so on the availability facet we could also be truly benefiting from the inflationary surroundings.”

Khosrowshahi made the feedback earlier than the U.S. Division of Labor launched the most recent inflation figures on Tuesday morning. The August inflation report confirmed an 8.3% value enhance year-on-year, displaying that inflation stays sturdy.

Rising rents and meals costs offset a fall in fuel costs. Meals costs increased 11.4% year-on-year, the most important 12-month bounce since 1979. Rents are additionally up 6.3% year-on-year, a rise not seen since 1986. Core CPI, which excludes meals and fuel costs, rose 0.6% month-on-month, in comparison with a 0.1% enhance month-on-month for the broader CPI. 

A rise in residing prices could also be pushing individuals to enroll as Uber drivers to make ends meet. In August, the ride-hailing firm reported 76% driver growth year-on-year within the second quarter of the 12 months. In remarks launched alongside the ride-hailing firm’s earnings report, Khosrowshahi said that driver engagement was at a “post-pandemic excessive”, pushed by “an acceleration in each energetic and new driver development.”

Throughout Uber’s earnings name, the corporate’s CEO said that “the price of groceries, the price of residing [is playing] an element in that call for [drivers] to return onto the platform.”

Uber also reported a lack of $2.6 billion within the second quarter, however income beat analyst expectations at $8.1 billion. 

Uber didn’t instantly reply to a request for remark. 

Uber shares fell 3.7% on Tuesday amid a broader collapse in inventory markets following the August inflation report, as buyers judged that persistent excessive inflation makes additional rate of interest hikes by the U.S. Federal Reserve extra probably. Shares had their worst day since June 2020 on Tuesday, with the S&P 500 dropping 4.3%. Solely five stocks on the S&P 500 ended the day in constructive territory. 

Different tech shares carried out worse than Uber, with Meta shares falling 9.4% and Amazon shares dropping 7.1% on Tuesday. 

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