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For months, government rules and fears about catching Covid-19 meant everyone stayed put. Finally, though, there are signs of change — and Uber (, for one, is thrilled. )
“Uber has already begun to fire on all cylinders,” CEO Dara Khosrowshahi told analysts after the company reported earnings Wednesday.
What’s happening: As the economic recovery picked up in key markets like the United States, the startup reported a net loss of $108 million for the first three months of the year. That’s a dramatic improvement from the $968 million loss it posted during the final three months of 2020.
The company’s core ride-hailing business still looks weak, with gross bookings for rides down 38% compared to a year earlier. But major growth in food delivery, which saw bookings jump 166% compared to the same period in 2020, is helping Uber weather the storm.
Even as customers return to the app, however, there’s significant uncertainty over Uber’s relationship with its drivers.
See here: Driver supply has been a problem recently as the company tries to convince people it’s safe to start ferrying riders around again. Khosrowshahi said the company is offering incentives to get old drivers back on the road and to find new recruits.
“There’s a greater hesitation for some drivers to come on board to drive other people versus, again, [driving] food,” Khosrowshahi said.
The longer-term problem is how Uber compensates its workers.
Earlier this year, the UK Supreme Court upheld a ruling that Uber drivers in the country should be classified as workers and not independent contractors. That means they’re entitled to the minimum wage, vacation time and a pension.
Uber said Wednesday that it had to set aside $600 million to deal with these changes.
It’s not the only place where the tide could be turning against Uber on labor issues. Chief Legal Officer Tony West acknowledged that the company is actively engaging on such matters with officials across Europe, which he said is “really is at the forefront.”
But the approach from the Biden administration is increasingly under the microscope, too. On Wednesday, the US Labor Department said it was withdrawing a Trump-era rule that would have made it easier for companies to classify gig economy workers as independent contractors.
“Legitimate business owners play an important role in our economy but, too often, workers lose important wage and related protections when employers misclassify them as independent contractors,” Labor Secretary Marty Walsh said in a statement.
Investor insight: West said the current administration doesn’t have a uniform set of views, which “creates space for some meaningful dialogue.” But investors may not be as sanguine. Shares are down 4% in premarket trading.
GameStop and Archegos drama could trigger new SEC rules
A tumultuous start to 2021 has grabbed the attention of Wall Street’s top regulator, which is considering new rules in the wake of GameStop ( trading mania and the collapse of the hedge fund Archegos earlier this year. )
That’s according to Gary Gensler, the chair of the Securities and Exchange Commission. Gensler is due to testify Thursday before the House Financial Services Committee.
His prepared remarks indicate a wide range of concerns about the functioning of markets and investor behavior, and a conviction that stricter oversight may be needed. The SEC expects to publish a staff report assessing recent market events this summer.
In the meantime, here a sampling of what’s on Gensler’s mind:
- On game-like trading apps: “If we watch a movie that a streaming app recommends and don’t like it, we might lose a couple of hours of our evening. If a fitness app nudges us to exercise, that’s probably a good thing. Following the wrong prompt on a trading app, however, could have a substantial effect on a saver’s financial position.”
- On how Robinhood makes money: “Higher volumes of trades generate more payments for order flow. This brings to mind a number of questions: Do broker-dealers have inherent conflicts of interest? … Are broker-dealers incentivized to encourage customers to trade more frequently than is in those customers’ best interest?”
- On social media: “I’m not concerned about regular investors exercising their free speech online. I am more concerned about bad actors potentially taking advantage of influential platforms.”
- On the big picture: “Whenever there are major market events, it’s a good idea to consider what risks they might have placed on the entire financial system, even when the system holds.”
Why Melinda Gates just received stock in a Canadian railroad
In the divorce of Melinda and Bill Gates, the division of their vast wealth is unlikely to cause fireworks and fury. That’s because the pair has a separation contract in place, my CNN Business colleague Jeanne Sahadi reports.
In the state of Washington, where Melinda Gates filed her petition for divorce this week, a separation contract promotes “the amicable settlement of disputes” and is binding unless, for some reason, the court finds that it was unfair to one party when it was executed.
Such an agreement is typical in divorces of very high net worth couples, where the splitting of assets can be complex.
“There is 100% reason to think the divorce is amicable,” said celebrity divorce attorney William Breslow.
See here: Just this week, Bill Gates transferred roughly $2 billion in shares of AutoNation and Canadian National Railway to his wife, according to SEC filings from his firm Cascade Investments.
The Wall Street Journal also reports that Melinda Gates now has a 4.9% stake in a Coca-Cola bottler worth about $121 million, and a $386 million stake in Mexican broadcaster Televisa.
ArcelorMittal (, )Edgewell Personal Care (, )Kellogg (, )Moderna (, )Papa John’s (, )Plug Power (, )SeaWorld Entertainment (, )Tapestry ( and )Wayfair ( report results before US markets open. )Beyond Meat (, )Datadog (, )Expedia Group (, )GoPro (, )Groupon (, )Live Nation (, )Monster Beverage (, )Peloton ( and )Square ( follow after the close. )
- The Bank of England announces its latest policy decision.
- Initial US jobless claims for last week post at 8:30 a.m. ET.
- SEC Chair Gary Gensler testifies before the House Financial Services Committee at 12 p.m. ET.
Coming tomorrow: The US jobs report for April is a crucial test for the country’s economic recovery.