The resilience of food delivery operation Uber Eats has mitigated the drop in passenger rides
Dublin — Uber Technologies drew a warm response from Wall Street after the firm posted its first-ever decline in rides, but said business is already starting to to recover.
Analysts particularly noted the resilience of Uber’s food delivery operation, Uber Eats, which mitigated the effect from the drop in passenger rides. Further diversification is seen as possible, with Citigroup considering partnerships and Morgan Stanley identifying add-on opportunities such as grocery delivery.
Uber CEO Dara Khosrowshahi said on Thursday that ride-hailing sales have increased for each of the past three weeks and are on track to do so again this week. Uber shares rose 6.2% in pre-market trading to $32.85, compared with Thursday’s close of $30.93. The stock has rebounded 109% from the record low hit on March 18.
Rival ride-hailing company Lyft rose 22% following its results on Thursday, although analysts had mixed reactions to the numbers.Thanks to diversification, Uber’s revenue declines will be less severe than they otherwise would be if the company were a ride-hailing pure-play. We expect this trend to continue, and although Uber Eats remains less profitable than ride-hailing, we think the food delivery business could experience structural, permanent, and largely favourable changes due to Covid-19.
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