UBER Stock Jumps on Uber Eats Autonomous Delivery Deal

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  • Ride-hailing platform Uber (UBER) moved up around 4% in the afternoon session.
  • The company’s Uber Eats food-delivery service signed a deal to promote automated services.
  • UBER stock may soon enter a new controversy related to worker displacement.
UBER stock - UBER Stock Jumps on Uber Eats Autonomous Delivery Deal

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Though suffering from a market performance drought this year, ride-hailing specialist Uber (NYSE:UBER) once again attracted positive attention, this time inking an autonomous services deal that could help drive long-term growth for UBER stock. At the same time, the contract could prove controversial due to its economic and social implications.

On Sept. 8, Uber announced that it signed a multi-year partnership with Nuro, a leading autonomous vehicle company. Under the terms of the agreement, its food-delivery arm Uber Eats will use Nuro’s autonomous electric vehicles for food deliveries in the U.S.

Per the underlying press release, the “partnership will kick off this fall with deliveries in Houston, TX and Mountain View, CA. Uber and Nuro plan to expand the service to the greater Bay Area.”

According to The Verge, Nuro’s second-generation R2 vehicle is about half as wide as a compact sedan and shorter than most cars. Further, with no room for human drivers or passengers, the R2 is truly driverless. As well, it “can carry a total of 500 lbs, with space for about 24 grocery bags in its compartments.”

Adding to intrigue for UBER stock, Nuro represents the first company to receive a special exemption from certain federal safety requirements. The Verge notes that Uber is also working with Serve Robotics and Motional to test robot deliveries.

UBER Stock Swings Higher, But Controversy Awaits

Taken to its logical conclusion, the autonomous services deal should bolster the bottom line for UBER stock. Though the ride-hailing concept revolutionized personal mobility, that hasn’t translated well for the underlying company. According to Reuters, Uber finally reported its first operating profit for its third quarter of 2021 earnings report.

Otherwise, the longer-term narrative for UBER stock remains challenging. On a trailing-12-month basis, Gurufocus.com reports that the underlying company’s retained earnings is a loss of $32.16 billion. Undeniably, driver fees represent a significant portion of Uber’s overhead. Therefore, automating food deliveries could help turn the business profitable.

However, the pivot presents incredible controversies. According to analysis by The Brookings Institution, 25% of the U.S. workforce faces “high” exposure to automation. This “disruption figure amounts to 36 million jobs that will incur significant upheaval, or even need to be offset with new work.”

Therefore, while the current news is positive for UBER stock, it may come at a human cost. Because of this social impact, future regulations and legislative pushback may not be out of the question.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/09/uber-stock-jumps-on-uber-eats-autonomous-delivery-deal/.

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