Mobility services provider Uber Technologies, Inc. (NYSE: UBER) recently revealed that the company has been ordered by the Justice Department to pay fines to passengers with physical disabilities who had been wrongfully charged wait-time fees.
Shares of the company responded well to the news, rising more than 4.2% to close at $22.60 in yesterday’s extended trade. The gain perhaps reflects a sense of relief among the shareholders as the case comes to a conclusion.
Uber to Pay a Million-dollar Fine
The Justice Department came to the conclusion that the ride-hailing giant will have to “offer several million dollars in compensation” to passengers who were wrongly charged wait-time fees for their disabilities.
Uber’s wait-time fee is structured in such a way that it applies two minutes after an Uber driver arrives at a pick-up location. According to Uber, the average fee is less than 60 cents.
Notably, in November 2021, the company was asked by the Justice Department, in a suit filed in the U.S. District Court for the Northern District of California, to modify its wait-fee policy and pay unspecified monetary damages and civil penalties. Uber had then modified its wait-time policy before the suit was filed.
Management’s Commentary
An Uber spokesman said, “It has long been our policy to refund wait time fees for riders with a disability when they alerted us that they were charged, and prior to this matter being filed we made changes.”
Analysts Remain Optimistic About Uber
Recently, Citigroup analyst Ronald Josey reiterated a Buy rating on the stock. The analyst, however, lowered the price target from $50 to $48, which implies upside potential of 112.6% from current levels.
Consensus among analysts for the Uber stock is a Strong Buy based on 27 Buys and three Holds. The UBER average price target of $47.57 implies upside potential of 110.7% from current levels. Shares have declined 50.4% over the past year.
TipRanks Website Traffic
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Uber’s performance this quarter.
According to the tool, the Uber website recorded a 122.03% monthly rise in global visits in June, compared to the same period last year. Moreover, year-to-date, Uber website traffic increased by 79.91%, compared to the previous year. Learn how Website Traffic can help you research your favorite stocks.
Uber’s rising website traffic reflects solid demand for the company’s services amid a surge in outdoor travel.
Key Takeaways
Uber has been mired in legal troubles for quite some time now. However, the resolution of a critical case like this one will be a relief for Uber, even though the company has to shell out a hefty fine. Now that this matter has been resolved, Uber has fewer legal issues to worry about and can focus more on improving its services.
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