Uber and Disney are seeing the same remarkable dynamic in this economy. Both stocks are surging
Higher gas prices and rising geopolitical tensions are doing little to slow down the American consumer — at least judging by recent results and commentary. Uber Technologies And Walt Disney Company.
The two companies noted a remarkably resilient spending environment, with consumers continuing to spend money on travel, food delivery, holidays and theme park trips as oil prices rise and broader concerns about the economy persist.
Uber’s shares rose more than 8%, while Disney shares rose more than 7%.
Uber CEO Dara Khosrowshahi said on CNBC’s “Squawk Box” on Wednesday: “We’ve watched consumer patterns really closely. Are people taking shorter trips? Are people downsizing, so to speak, as they shop in terms of the size of their carts? Are consumers tipping as much as they used to in terms of the types of restaurants they eat at? All of those indicators continue to be really strong.” “Consumers are spending, they’re spending locally, and we’re not seeing any signs of weakening at this point.”
At Uber, delivery remained the company’s fastest-growing business in the latest quarter, with revenue rising 34% to $5.07 billion from $3.78 billion a year earlier. Revenue for the ride-hailing division rose 5% to $6.8 billion as commuter activity and local spending remained strong.
Khosrowshahi said Uber is seeing consumers continue to leave their homes more frequently, helped in part by the back-to-the-office trend that is driving demand for commuting. The company currently has more than 10 million earners worldwide, including drivers and delivery workers, on its platform.
The same resilience has been seen at Disney, where the entertainment giant exceeded Wall Street expectations on the strength of its streaming and parks businesses.
Disney’s experiences division, which includes theme parks and rides, generated nearly $9.5 billion in quarterly revenue, up 7% from a year earlier. Domestic park visitation decreased by 1%, while global attendance increased by 2%.
“Current demand at our domestic parks and resorts is healthy,” Disney said in its earnings materials. “While we recognize the potential impact of increased global macro uncertainty on consumers, we are encouraged by current demand and expect annual attendance at our domestic parks in Q3 to improve compared to Q2 results.”
Results from Uber and Disney defied expectations of a slowdown in consumer spending as gas prices rose and investors worried that rising energy costs could eventually squeeze household budgets.
The national average price of regular gasoline has risen 52% since the start of the Iran war to $4.54 per gallon, according to AAA data. Diesel prices have similarly risen nearly 51% since late February to $5.67 per gallon.
But so far there is little evidence of a pullback at these companies linked to travel, entertainment and local commerce.
Disney Chief Financial Officer Hugh Johnston said the company is still monitoring signs that higher fuel costs could eventually put pressure on consumers.
“We recognize the macro uncertainty facing consumers and are not immune to the impacts, including that a significant increase in fuel prices from current levels could eventually lead to changes in consumer behavior,” Johnston said on Wednesday’s earnings call. “If this possibility were to materialize, every business has the tools to make adjustments to offset such macro pressures.”
