High gasoline prices and rising geopolitical tensions aren’t doing much to slow down the pace of U.S. consumer spending — at least judging by the latest results and observations. Uber Technologies And walt disney company.
Both companies pointed to a remarkably resilient spending backdrop, with consumers continuing to pay for rides, food delivery, vacations and theme park visits, while oil prices are rising and broader concerns about the economy persist.
Uber shares rose more than 8%, while Disney shares rose more than 7%.
“We looked really closely at consumer patterns. Are people taking shorter trips? Are people trading up in terms of the size of their grocery basket? The types of restaurants they’re eating at, are consumers tipping as much as they were? All of these indicators remain really strong,” Uber CEO Dara Khosrowshahi said on CNBC’s “Squawk Box” on Wednesday. “Consumers are spending, they’re spending locally, and we don’t see any sign of that weakening at this point.”
At Uber, delivery was the company’s fastest-growing business in the latest quarter, with revenue rising 34% to $5.07 billion from $3.78 billion a year earlier. Revenue in the ride-hailing division rose 5% to $6.8 billion as commuter activity and local spending remained strong.
Khosrowshahi said Uber is seeing consumers are leaving their homes more frequently, helped in part by a return-to-office trend that has increased demand for commutes. The company now employs more than 10 million people globally, including drivers and delivery workers.
The same resiliency was on display at Disney, where the entertainment giant topped Wall Street expectations on the strength of its streaming and parks businesses.
Disney’s experiences division, which includes theme parks and cruises, reported nearly $9.5 billion in quarterly revenue, up 7% from a year earlier. Global attendance increased by 2%, while domestic park visits decreased by 1%.
“Current demand at our domestic parks and resorts is healthy,” Disney said in its earnings material. “While we acknowledge the potential impact of increased global macro uncertainty on consumers, we are encouraged by current demand and expect the third quarter to see year-over-year attendance improvements at our domestic parks compared to second quarter results.”
The results from Uber and Disney defied expectations for a slowdown in consumer spending as gasoline prices rise and investors worry that rising energy costs could ultimately hit household budgets.
The national average price of regular gasoline has hit $4.54 a gallon, up 52% since the start of the Iran war, according to AAA data. Diesel prices have also risen similarly to $5.67 a gallon, up nearly 51% from the end of February.
But so far, these companies involved in travel, entertainment and local commerce are showing little evidence of a comeback.
Disney Chief Financial Officer Hugh Johnston cautioned that the company is still monitoring signs that persistently high fuel costs could eventually weigh on consumers.
“We are conscious of the great uncertainty facing consumers and we are not immune to its implications, including how further increases in fuel prices from current levels could ultimately change consumer behavior,” Johnson said on an earnings call Wednesday. “If that possibility occurs, every business has levers to make adjustments to address those types of macro pressures.”
