Uber ditches the scooters, self driving cars, and helicopters. Replaces them with profits
First the electric scooters got the axe. In May 2020, Uber announced it was “selling” its electric scooter division, Jump, to Lime Scooters. The deal terms stated Lime would not pay a single dollar to Uber, instead Uber would take a 16% stake in Lime plus invest $85MM on the merger.

Jump had been acquired by Uber just 2 years before for $200MM, and at the time of the deal, Lime commanded a $510MM valuation. This made the “sell” of Lime a 9-digit paper loss.

Then it was ATG’s turn. In December 2020, Uber announced it would be “selling” its self-driving cars division, ATG, to Aurora. The deal had a similar structure, Uber would sell its full stake in ATG and not receive a dollar in exchange. Uber would then invest $400MM cash in the freshly merged company, all around leading to a $3.65BB paper loss for Uber, plus the cash.

A day after the ATG’s deal announcement, Uber announced it was selling its air taxi division, Elevate, to Joby Aviation. Again, Joby would not pay a single dollar, but rather receive a $75MM investment post-merger.

Despite what it may look like, Uber is not imploding or scaling back, rather it is focusing on its strongest segments and buying options for the future. Just months before all of these deals, the company acquired Postmates for $2.65BB in an all-stock deal, to strengthen what has now become its fastest growth segment, Uber Eats.

Is this a new strategy that the company had to adopt in order to bear with crazy 2020? Not quite. The company has a long history of M&As: In 2016 it sold its Chinese operations to Didi for a 18.8% stake which was valued at $10BB earlier this year. Similarly, it sold its Southern Asia operations to Grab in 2018 for a 30% stake, valued at $4BB just a year later. Not to forget Russia, where it sold its operations to Yanded for a 28% stake, valued at over $1BB at the time.

The big difference is that this time around, the bottom line is in the centre of the scope. At a time where the company starts to trim fat, its investments in its two main segments are starting to mature, so for 2021 I am proposing Uber will turn profitable.
['Gonzalo Espinoza Graham']
['Stocks', 'Tech', 'Business', 'Technology', 'Uber']