Uber CEO shocked by taxi fares in New York

Uber CEO shocked by taxi fares in New York

In its quarterly earnings report on August 1, 2023, Uber announced its first-ever quarterly operating profit. But, according to the New York Post, the company’s new tariffs have discouraged even its CEO.

A journalist who rode an Uber from midtown Manhattan to interview company boss Dara Khosrowshahi paid $51.69 for the 5km (2.95 miles) ride, including a tip to the driver.

In a meeting with Khosrowshahi at Uber’s annual Go-Get event in May, Steven Levy, editor of Wired, asked the CEO to guess the cost of the ride.

“Twenty bucks,” Khosrowshahi suggested.

Then Levy told the Uber boss that he had only driven 5 km in a taxi and paid more than $50 for this trip. This was his second attempt to hail a taxi. During the first order, the price was set $20 higher.

“Oh my God. Wow!” the boss exclaimed.

According to Levy, Khosrowshahi attributed this dizzying cost to a “higher tariff.” Uber uses them in bad weather, during traffic jams or in places where there are a lot of customers.

“The increased tariff has nothing to do with it,” the journalist replied. – It’s 10 am. It’s a sunny weekday and it doesn’t seem like the president is in town.”

“Everything is getting more expensive,” Khosrowshahi said bluntly. According to him, the consequences of inflation have led to the fact that fares are rising along with the cost of time and labor.

On the subject: Uber drivers went on strike in New York: they demand higher taxi fares

Analytics and profit

Forbes concluded in its report that Uber prices in the US rose four times more than they should, given the inflation rate from 2018 to 2022. Tariffs have risen a total of 83% in nearly four years, according to Forbes.

In the past, Khosrowshahi has attributed price increases to a shortage of drivers during the pandemic, even though Uber hit a record high of 5 million drivers in August 2022, up 31% from the previous year. Higher prices may have played a role in the company’s first-ever operating profit.

Uber, as of June 30, recorded a profit of $394 million over a three-month period. This is a significant improvement from the $2.6 billion loss the company posted at this time last year.

Operating profit for the quarter was $326 million, the first profitable quarter since Uber’s founding in 2009.

The company predicts that by the end of the third quarter, on September 30, they will further increase profits.

Meanwhile, revenue is up 14% year-on-year (to $9.2 billion) and total in-app transactions are up 16% since 2022 (to $33.6 billion). Despite the positive performance, on Tuesday, August 1, Uber shares fell almost 6%.

Change of leadership

The company announced that Uber CFO Nelson Chai will leave the company in January 2024, and is now “looking for a replacement.”

Chai, who took over in 2018, led Uber’s 2019 initial public offering and oversaw the $2.65 billion acquisition of Postmates in a 2020 stock deal.

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