Finimize - 🏁 Uber-profitable

What’s going on here?

Uber’s been burning rubber, posting its first-ever operating profit last quarter.

What does this mean?

Even as prices are climbing, it seems consumers aren’t ready to give up the convenience of hailing rides and ordering takeout. Instead, they’re doing it with more gusto than ever. And Uber – well, it’s been more than happy to meet that sky-high demand. With driver numbers back to pre-pandemic levels, the company was in the fast lane last quarter. The result: a 26% jump in trips on the platform, record-breaking ride-hailing bookings, and food delivery orders at an all-time high. Throw in some savvy cost controls, and Uber cruised to its first operating profit. After years of chasing growth, that switch to profitability is a milestone worth honking about.

Why should I care?

For markets: No Lyft-off.

Uber’s share price has almost doubled this year, and that’s left rival firm Lyft red-faced about its modest 9% increase. See, Lyft’s been losing market share, and it’s Uber that’s been picking up the slack – and the passengers. By the end of June, Uber had scooped up about three-quarters of US consumer ride-share sales. Part of that success is probably down to the breadth of its offerings: after all, Uber offers food delivery too, unlike Lyft. And while the trailing firm plans to cut fares to attract riders, Uber’s adding even more bells and whistles like group and guest rides and even video gift messaging.

The bigger picture: Freight nerves.

One area that didn’t shine so brightly was Uber’s freight business, but that’s hardly a surprise. After all, consumers are more inclined to spend their cash on services rather than goods these days. Even logistics giants like Maersk are warning of falling volumes, while the IMF reckons growth in the amount of goods being traded worldwide is set to drop sharply from last year’s levels.

What’s going on here?

Toyota spent last quarter in the profit-making fast lane, according to Tuesday’s update.

What does this mean?

While a slowdown in China has got carmakers like Volkswagen and Nissan trimming their sales outlooks, Toyota managed to keep its wheels turning last quarter. And sure, the world’s biggest carmaker still felt the pinch in China – but it made up for it thanks to robust demand in the US and a weaker Japanese yen, boosting the value of its international earnings. In fact, Toyota sold over 2.5 million vehicles globally, an 8% increase from the same time last year. That drove operating profit up by an eye-watering 94% to a record high – hitting 37% of its annual target in just one quarter. Investors were revved up by that news, sending Toyota’s stock to a record high too.

Why should I care?

The bigger picture: Charging into China.

Toyota’s performance in China certainly wasn’t stellar, and the fact is, conquering the world’s biggest car market is crucial for the Japanese giant. See, the rapid shift away from gas guzzlers in China and the rise of local EV brands are serious challenges, given that Toyota’s mainly sold hybrids and gas-powered cars to date. So, to retain its crown as the world’s biggest carmaker, Toyota needs to accelerate its development of EV tech, expand its battery-only lineup, and cut costs to boost its competitiveness in the country too.

Zooming out: A yen for profit.

Japanese companies have been cruising lately, with favorable currency conversions giving their results a helping hand. But that tailwind might be set to lose its strength: as inflation heats up in Japan, the Bank of Japan could be nudged to join the global fight against rising prices. And that shift could pump up the yen’s strength and turn the tables on Japanese multinationals – a scenario that some analysts are already placing bets on.