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Uber is reportedly reintroducing shared rides in a select number of cities within the United States but under a new name – UberX Share.

Miami has been chosen as the first city where the service will be made available but residents of other cities including New York City, Los Angeles, and San Francisco will soon be able to enjoy the feature.

Uber temporarily discontinued share rides in 2020 due to the pandemic as the service was in direct conflict with the prevailing social distancing protocols. However, with COVID now progressively becoming a less threatening illness, the company has green-lighted the initiative once again.

Shared rides allow users to save money by allowing a stranger to join them as long as their origin and destination are similar. The algorithm that powers the Uber app is designed so it can find matches along the way.

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According to Uber, users will get an upfront discount when using the services and a 20% discount on the total fare if there is a matching passenger. Both passengers and drivers are required to use a mask in the vehicle regardless of whether they are vaccinated or not.

Uber stock reacted positively to the news as it rose nearly 7% to $21.81 per share as investors appear to believe that share rides can help the firm in revamping its top-line performance in the future.

However, shares of the ride-hailing business are accumulating a 48% loss since the year started amid a deterioration in macroeconomic conditions in the United States and across the globe.

High Gas Prices and Inflation Are Threatening Uber’s Once-Cheap Fares

uber threatened by high gas prices

Gasoline prices in the United States have soared this year as the federal government enforced a ban on Russian oil imports in response to Vladimir Putin’s actions against Ukraine.

As a result, rides are getting more and more expensive by the day as gasoline is a direct cost for Uber drivers.

Protests have already taken place in locations like New York City where taxi drivers are unionized. Uber drivers within the city want a raise. They cited the country’s elevated inflation – which surged to 8.6% in May – and high gas prices as the primary reason for their claim.

A minimum of $25 per hour after expenses is what the members are demanding from the Taxi and Limousine Commission (TLC) – the entity in charge of regulating fares and compensation for drivers within the crowded city. Currently, the hourly fee for a unionized driver is standing at $18.

The reintroduction of its ride-sharing service may allow Uber users to save money at a point when fares are skyrocketing. This could cushion a decline in the demand for said services if gasoline prices stay at these elevated levels for longer than expected.

In March this year, Uber introduced a temporary fuel surcharge to help drivers in coping with the latest surge in gas prices. Users are now required to pay up to 55 cents per ride to cover this charge.

“We know that prices have been going up across the economy, so we’ve done our best to help drivers and couriers without placing too much additional burden on consumers”, Uber stated to justify the measure.

Uber’s Financials Keep Recovering After the Pandemic

Despite these headwinds, Uber still managed to report gross bookings of $10.72 billion from its mobility business during the first three months of the year. This resulted in a 62% year-on-year jump on a constant currency basis.

Meanwhile, mobility revenues during that same period surged 201% to $2.52 billion. Even though these percentages seem quite surprising, it is important to note that comparables were heavily depressed by the impact of the pandemic on Uber’s mobility business in 2021.

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However, during these three months, Uber reported a net loss of $5.93 billion that was primarily caused by an unrealized loss in the company’s equity stake at Didi Global – a Chinese ride-hailing app.

Uber’s cash burn, however, improved in this quarter as the company produced positive operating cash flows of $15 million and free cash flows of minus $47 million.

In addition, Uber had $4.3 billion in liquid reserves and $11.8 billion in investments including its stakes at Didi and Aurora – which it can liquidate if needed to strengthen its liquidity position. Considering these reserves and the fact that the has only $9.28 billion in long-term debt, Uber’s solvency doesn’t appear to be an issue as long as it can maintain its cash burn under control.

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