Uber (UBER) Bets On Drones As Its Delivery Engine Accelerates

Uber, the ride-hailing giant, is investing in drone delivery technology through a partnership with Zipline, a drone delivery company. This move comes as Uber attempts to boost its business and convince investors that its performance is stronger than its stock price suggests. Uber's core business, including rides and freight, has been expanding rapidly, with monthly active platform consumers increasing by 16% year-over-year, and trips rising by 18%.

Delivery, which now accounts for over a third of total sales, is the primary driver of this growth, with revenue growing 28% year-over-year in the second quarter. The CEO, Dara Khosrowshahi, revealed that the company added more first-time users over the past year than in any previous period over the past five years. However, Uber's stock has been underperforming, down around 9% this year, even as revenue, profit, and user growth have all improved.

The Zipline partnership aims to bring autonomous drone delivery to Uber Eats customers across the United States, with the goal of 1 million drone deliveries per day by the end of 2029. Zipline has already completed 2 million deliveries and is operating on four continents, making it a well-funded and proven partner for Uber. While the partnership shows promise, it comes at a significant cost, with Uber committing $10 billion to self-driving cars and the drone delivery initiative.

The market's reaction to Uber's recent performance suggests that investors are still uncertain about the company's long-term prospects, despite the positive financial results.