Uber’s first-quarter loss may have just been a small detour.

Last year, the ride-share giant finally turned an annual profit after years and years of burning billions, only to slip back into the red in the first quarter of 2024. On Tuesday, Uber returned to profitability, bucking macroeconomic trends and proving it can diversify its revenue streams in the process.

Ride or Die

Flagging consumer spending has helped fuel resurgent recession fears and market turmoil. But Uber has remained on a fast route. “The Uber consumer has never been stronger,” CEO Dara Khosrowshahi said during the company’s earnings call Tuesday, adding that Uber is “not seeing any softness or trading down across any income cohort.” Gross bookings for its mobility unit were up 23% year-over-year, notching $20.6 billion, while food delivery gross bookings rose 16% to $18.1 billion. Total rides, meanwhile, reached 2.77 billion in the quarter, up from 2.28 billion a year ago. (Uber, it should be noted, is also somewhat recession-proof: Economic downturns tend to lead to more driver sign-ups, thus reducing prices and wait times for riders.)

Meanwhile, Uber’s effort to take all of our juicy mobility data and create an advertising giant is starting to pay off — potentially creating a reliable new revenue stream should increased regulation finally upset the gig economy status quo:

• In its earnings call, Uber said that its ad revenue run rate will exceed $1 billion this year, well up from the $650 million seen last year. Independent retail media analyst Andrew Lipsman told Adweek that Uber’s global scale is behind the ad boost, with a reach seen by few retail media networks aside from Amazon.
• Overall profit came in at $1.02 billion, which includes a $333 million benefit from equity investments (a massive U-turn from the $721 million loss from equity investments last quarter), smashing consensus expectations of around $654 million.

Gig Tech: Uber’s share price popped around 11% on news of the strong quarter, ahead of the 1% clawbacks seen by the S&P 500 and Nasdaq 100 on Turnaround Tuesday as well as the 1.2% rebound tracked by Bloomberg’s Magnificent Seven Total Return Index. It’s not the only gig economy company to find success amid the broader market correction. Instacart beat expectations in its earnings call on Tuesday, further buttressing fears of a consumer slowdown, and last week DoorDash beat expectations as well, with gross order value increasing 20% year-over-year to $19.7 billion and total orders jumping 19% to 635 million. Recession fears be damned: Everyone seems happy to pay $35 for doorstep ramen delivery. 

When you’re in the credit business, credibility is the whole point.

On Tuesday the validity of carbon offset credits — credits that companies can sell to one another, intended to motivate reductions in their greenhouse gas emissions — took a big hit. The Integrity Council for the Voluntary Carbon Market (ICVCM), an independent nonprofit watchdog for the carbon market, issued some new guidelines on what types of carbon credits it can rubber-stamp. The upshot: Roughly a third of existing carbon credits have now lost their certification, leaving the planet less green than we previously thought.

Renewables Aren’t Green Enough 

The label that the ICVCM issues to projects it deems worthy of generating carbon credits is called the Core Carbon Principles (CCP) label. The ICVCM said it’s specifically removing the CCP label from projects issued “under existing renewable energy methodologies.” So if you’re, let’s say, a big fossil fuel company with a renewable energy division that you use to drum up carbon credits, those credits are now stripped of their validity.

A spokesperson for Verra, another nonprofit that sets standards for carbon credits, told The Daily Upside: “The market has evolved and grid-scale renewable energy projects in most countries no longer depend on climate finance so that’s why Verra stopped accepting new renewable energy projects five years ago — except in Least Developed Countries, where carbon credits can still make the difference between new coal and new clean energy.” 

The downgraded efficacy of carbon credits is the latest blow to the market: 

• Bloomberg reports that the carbon credit market has contracted by close to 25% since its peak in 2022. In May, a report by Ecosystem Marketplace found that the transaction value of the voluntary carbon market shrank 61% between 2022 and 2023.
• The market hasn’t been totally discredited, however. Ecosystem Marketplace noted a small rebound in carbon credit prices at the beginning of this year.

Organized Carbon Crime: Quite apart from questions over whether carbon credits are effective, some are just plain scams. This week Brazil’s environment minister, Marina Silva, said carbon credit buyers should be on their guard: The country found criminal organizations selling something in the realm of $32 million in illicit carbon credits using stolen tracts of the Amazon rainforest.

It takes a mansion sale to fix a subway tunnel.

To you and me, it may look like an average one-bedroom apartment in the heart of New York City, but in the eyes of tax collectors, it’s a “mansion” because the price tag exceeds a million bucks. Now the Metropolitan Transportation Authority (MTA) plans to raise $2 billion via real estate bonds, backed by the mansion tax, to pay for much-needed infrastructure upgrades. The money was supposed to come from a planned congestion tax whose political engine suddenly failed. 

Train of Fraught

Two factors are pressing the brakes hard on the MTA’s route to fiscal stability: real estate and fare-dodging skimps. The MTA gets funding from mortgage recording taxes and taxes on commercial real estate sales, but home sales have slowed — 2,582 were sold in NYC in June, down 17% year-over-year, according to Redfin data — and commercial property values have tanked amid enduring post-pandemic vacancies. On the fare side, the MTA said half of bus riders and 14% of subway riders evade paying.

Last week, the MTA also revealed it’s staring down potential deficits of $428 million in 2027 and $469 million in 2028, with a projected $790 million less in income from real estate taxes and $811 million less from fares between this year and 2027. The agency plans to cut expenses by $400 million this year and $500 million in 2025, and intends to hike fares and tolls by 4% in both 2025 and 2027, but it still needs more revenue and/or ridership. Even more urgently, the MTA is staring at a $16.5 billion hole — the new real estate bonds will plug a fraction of it:

• The agency had to defer upgrades and repairs to its subway and bus networks, as well as work on East Harlem’s Second Avenue Subway expansion, after New York Gov. Kathy Hochul indefinitely paused a planned congestion tax on motorists entering Manhattan in June. The levy would have covered $15 billion of the $16.5 billion shortfall in the MTA’s $54.8 billion 2020-2024 Capital Program.
• The $2 billion raised from mansion tax bonds will go toward the Capital Program by borrowing against revenue from an additional levy on the transfer of residential properties worth $2 million or more (the first apron of the mansion tax kicks in at $1 million). Kevin Willens, the MTA’s CFO, told Bloomberg that the bonds will go on sale this year or in early 2025.

Lifestyles of the Median and Obscure: Introduced in 1989, New York City’s mansion tax didn’t take inflation into account. The median home price in Manhattan was $1.3 million in June, according to Redfin data.