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Jared Dillian

Uber Embodies the Post-Covid Inflationary Economy

The ride-sharing company is finally enjoying some pricing power, which may be the turning point investors have long waited for.

Uber is starting to hits its stride as a profitable company. 

Uber is starting to hits its stride as a profitable company. 

Photographer: Scott Olson/Getty Images

Uber Technologies Inc. Chief Executive Officer Dara Khosrowshahi said not long ago that the rideshare company’s mission was to become profitable, rather than the loss-making enterprise it had been since inception. For the first time, Uber is succeeding, posting the biggest positive free cash flow in its history in the second quarter. This may finally be the long-awaited turning point investors have been waiting for, with the shares soaring as much as 19%.

At the time of its initial public offering in May 2019, I wrote that Uber had an intractable business model:  it couldn’t charge more for rides and it couldn’t pay drivers less. As a private company, Uber survived by attracting large amounts of investment through several rounds of funding. It used that investment to underprice rides and steal market share from the taxicab companies. I remember the days of taking $6 Uber rides around Miami and wondering if it was sustainable. It wasn’t. Sure it succeeded for a while, and there was a period when the market value of New York City taxi medallions crashed. But taxis never fully disappeared, and the post-pandemic economy is very different than the economy of 2019. It turns out that Uber can charge more for rides.