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Tuesday 13 April 2021
Demand, supply declines, but trends continue to improve
Investors have been driving through various plays on an economic reopening for more than a year.
But whether you’re betting on cruise lines, hotels, the housing market or a restaurant rebound, the core idea is that you believe a few things. This means that consumers are behaving as much as before the pandemic, while maintaining some new habits – and that only regulations or offers stand in the way of a complete recovery.
And all of these themes were present in Uber’s (UBER) announcement Monday morning about the state of affairs.
“[In] “By March 2021, the total gross discussions of the company reached the highest monthly level in the nearly twelve-year history of the company,” the company said on Monday.
Uber added: “The company’s mobility business achieved its best month since March 2020, with an annual gross rate of $ 30 billion, with an average daily gross margin of 9% month-on-month. Record, which was recorded in March. exceeded an annual gross discount rate of $ 52 billion, which grew by more than 150% year-on-year. ‘
In the fourth quarter, Uber’s annual revenue rate was closer to $ 25 billion, while Delivery was closer to $ 40 billion. And so this piece of Uber’s update shows both the maintenance of a habit of ordering a pandemic – even amid a growing and growing desire among consumers to venture into the world again as the vaccine rolls out and more COVID-related constraints are relaxed.
But with this resumption of activity also comes continued pressure, in the face of an increasing labor crisis in the service sector.
“As vaccination rates in the United States rise, we note that consumer demand for mobility is recovering faster than drivers’ availability, and consumer demand for delivery is still exceeding courier availability,” the company added. “On April 7, Uber announced that it is increasing investments in driver incentives to improve driver availability in the short term. We still believe Uber is on track to achieve quarterly adjusted EBITDA profitability in 2021.”
The most important thing holding back Uber’s business, in other words, is supply. Whether this means that companies are unable to meet demand due to the limited capacity in a restaurant, or because they cannot find enough workers, the net effect is that reopening currently depends on a simple economic imbalance.
However, investors reacted positively to Uber’s announcement, with shares of the company rising to 3.5% during Monday’s session. The company also reiterates its long-term adjusted EBITDA profitability target in 2021 has certainly not suffered any damage. But the reaction of the market shows that investors are still only asking companies one thing if they want to ask the reopening of themes: are you still growing?
Delayed timelines, higher costs and other capacity constraints are currently widely accepted by investors. Nobody thinks most businesses will not have problems in the months – and maybe years – ahead. And consequently, bad news in the short term can be easily overcome by continued good news in the long term.
In other words, the only investor question that needs to be answered today is whether there will be a greater demand for a company’s goods and services tomorrow than existed yesterday. The answer for Uber is now yes.
How the importance of other companies will answer this call, however, will be an important theme to earn in the first quarter over the next few weeks.
By Myles Abroad, reporter and anchor for Yahoo Finance Live. Follow him @MylesUdland
What to look for today
Economy
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06:00 ET: NFIB Optimization for Small Business, March (98.5 expected, 95.8 in February)
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08:30 ET: Consumer Price Index (CPI) month-on-month, March (0.5% expected, 0.4% in February)
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08:30 ET: CPI excluding food and energy month-on-month, March (0.2% expected, 0.1% in February)
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08:30 ET: CPI year-on-year, March (2.5% expected, 1.7% in February)
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08:30 ET: CPI excluding food and energy year-on-year, March (1.5% expected, 1.3% in February)
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08:30 ET: Real average weekly earnings year-on-year, March (4.1% in February)
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08:30 ET: Actual average hourly earnings year-on-year, March (3.4% in February)
Earnings
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