Daily Brief: Uber’s Ride-Hailing And Food Delivery Businesses Are Both About To Feel The Pressure

Daily Brief: Uber’s Ride-Hailing And Food Delivery Businesses Are Both About To Feel The Pressure

almost 3 years ago3 mins

Mentioned in story

Uber reclassified all 70,000 of its UK drivers as “workers” on Wednesday, in hopes it might finally get picked up from the airport next time it visits London.

What does this mean?

After losing a tough court battle last month, Uber was forced to treat the 25 drivers who brought the case as “workers” – that is, just shy of full employee status – rather than freelancers. Now, though, it’s gone the whole hog and decided to reclassify all of its UK drivers, which entitles them to minimum wage, vacation pay, and pension payments. The ride-hailing company didn’t say how much those added benefits would hurt its bottom line, but it did promise not to raise fares or to tweak its profitability forecasts for the rest of the year.

Uber's quarterly adjusted Ebitda
Source: The Wall Street Journal, FactSet

Why should I care?

Zooming out: Uber’s troubles might just be starting.

Uber may have lost the legal battle, but it still has a war on its hands. Even now, the company will still only pay its drivers once they’ve accepted trips and not for the time in between – which amounts to roughly a third of their working day. But since last month’s ruling dictated that those 25 drivers are working from when they log in to the app to when they log off, the rest might now come after the same treatment.

Uber stock
Source: Google Finance

The bigger picture: There’s a post-pandemic future to think about.

Uber’s ride-hailing has – for obvious reasons – struggled during the pandemic, but at least it had its food delivery business to pick up the slack. Of course, that dynamic might shift when restaurants reopen their doors and manage their own deliveries. That’s not a problem for Just Eat Takeaway.com, which has focused more on acting as an online marketplace than actually delivering the food – and become a favorite for big-name takeout chains as a result.

Keep reading for our next story...

Inflation Has Overtaken The Pandemic As Professional Investors’ Biggest Concern

Sanitizer image

A new survey showed that investors now think inflation is a bigger threat to their portfolios than the pandemic – but hey, at least it’s something new to get anxious about…

What does this mean?

Every month, Bank of America surveys over 200 investment managers to see what they’re most worried about, and for the first time in a year, it’s not coronavirus. They now think inflation is the biggest risk to their portfolios, and they almost all agree that it is on the way: a record 93% of those surveyed are expecting global inflation over the next twelve months. Investors’ biggest fear is that the combination of an economic recovery and unprecedented government spending will push inflation up by too much, too quickly. Because if that happens, central banks might hike interest rates to slow down rising prices – and damage stocks in the process.

BofA survey inflation

Why should I care?

For markets: The winners and losers of surging prices.

Inflation often goes hand in hand with strong economic growth, which might be why the survey’s participants are upping their stakes in economically sensitive sectors like banks and energy. Meanwhile, they’re selling off their shares in tech companies, whose earnings rely less on economic performance. So much so, in fact, that the percentage of their portfolios invested in tech stocks just hit its lowest level since 2009.

Fed officials growing more upbeat on economy and job market, see firmer inflation
Source: Bloomberg

Zooming out: It’s crucial to keep economic growth steady.

All eyes were on the US Federal Reserve’s (the Fed’s) update on Wednesday, as investors try to work out its future interest rate plans. See, the US economy is now likely to grow faster than the Fed previously thought, but the central bank has said – and repeated on Wednesday – that it doesn’t expect to raise rates anytime soon. That could be good for stocks in the short term, sure, but if prices start rising too fast and the Fed has a sudden change of heart, a selloff might be next…

The Fed’s new dot plot
Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG