Higher gasoline prices and rising geopolitical tensions are doing little to slow the American consumer – at least judging by recent results and commentary Uber technologies And The Walt Disney Co.
The two companies pointed to a remarkably stable spending picture, with consumers continuing to spend money on rides, food delivery, vacations and theme park trips, even as oil prices rise and broader concerns about the economy remain.
Shares of Uber rose more than 8%, while shares of Disney rose over 7%.
“We’ve been watching consumer behavior very closely. Are people taking shorter trips? Are people spending less on the size of their shopping basket, so to speak? Are consumers tipping as much as before, given the types of restaurants they’re eating at? All of those indicators continue to be very strong,” Uber CEO Dara Khosrowshahi said on CNBC’s “Squawk Box” Wednesday. “Consumers are spending, they’re spending locally, and we’re not seeing any signs of slowing down at this point.”
At Uber, delivery remained the company’s fastest-growing business in the last quarter. Sales rose 34% to $5.07 billion from $3.78 billion a year ago. Ride-hailing revenue rose 5% to $6.8 billion as commuter activity and local spending remained strong.
Khosrowshahi said Uber is seeing consumers continue to leave their homes more frequently, in part due to the return-to-office trend that has boosted commuter demand. The company now has more than 10 million earners on its platform worldwide, including drivers and delivery workers.
The same resilience was evident at Disney, where the entertainment giant beat Wall Street expectations thanks to its streaming and parking businesses.
Disney’s experiences division, which includes theme parks and cruises, had quarterly revenue of nearly $9.5 billion, up 7% from a year ago. Global attendance rose 2%, while domestic park visits fell 1%.
“Current demand at our domestic parks and resorts is good,” Disney said in its earnings filings. “While we recognize the potential impact of increased global macroeconomic uncertainty on consumers, we are encouraged by current demand and expect third quarter attendance at our domestic parks to improve year-over-year compared to second quarter results.”
Results from Uber and Disney beat expectations of a slowdown in consumer spending as gasoline prices rise and investors worry that rising energy costs could ultimately strain household budgets.
According to AAA data, the national average price for regular gasoline has risen to $4.54 per gallon, a 52% increase since the start of the Iran War. Diesel prices have also risen to $5.67 a gallon, up about 51% since the end of February.
But so far, these companies, which operate in travel, entertainment and local commerce, are seeing little sign of slowing down.
Hugh Johnston, Disney’s chief financial officer, warned that the company is still watching for signs that continued higher fuel costs could ultimately squeeze consumers.
“We recognize the macroeconomic uncertainty facing consumers and we are not immune to the impacts, including that a significant further increase in fuel prices from current levels could ultimately lead to changes in consumer behavior,” Johnston said on Wednesday’s conference call. “Should this eventuality arise, every company has leverage to make adjustments to offset these macroeconomic pressures.”
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