REUTERS/Brendan McDermid
- Bank of America on Friday identified Amazon and Uber as two stocks that stand to gain from the expiration of enhanced US unemployment benefits.
- Uber and Amazon should start seeing people coming their way to work as 4 million Americans lose extra federal jobless benefits on Monday.
- BofA maintained its buy ratings on the ride-hailing company and the e-commerce heavyweight.
- See more stories on Insider's business page.
Amazon and Uber will be two corporate beneficiaries of people returning to the labor market in coming months, according to Bank of America, as millions of Americans see enhanced unemployment benefits expire and the holiday shopping season begins
As of Monday, up to 7.5 million people will no longer receive a bump up in pay and benefits from two other federal programs aimed at help people who lost their jobs during the pandemic. The Labor Day expiration will mark the largest cutoff of unemployment benefits in US history, Bank of America said in a research note published Friday.
Uber was impacted by the Pandemic Unemployment Assistance program that offered unemployment insurance to gig workers for the first time. Now, "with over 4 million potential workers coming off of stimulus payments, we see potential for a rapid improvement of supply dynamics," said equity analysts Justin Post and Michael McGovern who also reiterated the bank's buy rating on the ride-hailing company's stock.
There are about 2 million Uber drivers in the US. In September, there were 4.2 million PUA recipients, with more than 1 million living in California alone. The analysts expect better driver supply in Los Angeles and San Franciso as well as in New York City. The supply of drivers has already started to normalize with the addition of 420,000 from February to July.
For Amazon, the expiration of enhanced unemployment benefits should help the largest employer in the US with labor supply and costs, said BofA, which also maintained its buy rating on the stock. The firm pointed out government data that estimated wages for transportation & warehouse workers rose by nearly 3% in June year over year.
"We project Amazon will need to add well over 100,000 workers this holiday season," as revenue increases 25% in the fourth quarter from the third quarter, the bank said.
Amazon shares were little changed on Friday. The stock so far this year has gained about 6%, underperforming the broader S&P 500 index that has climbed by roughly 20%.
Uber shares were off by 2% during Friday's session. The stock this year has slumped by 20%.