Yandex Takes Over Uber's Stake
The Russian Giant Has Acquired Uber's Interests For $ 1B
Yandex took over Uber's stake in its self-driving group and its interests in Yandex.Eats, Yandex.Lavka and Yandex.Delivery. It spent $ 1B on it and gave the Russian company 100% ownership over these four business segments.
Uber's Focus
Uber sold its Chinese business in August 2016 to DiDi and merged its Russian operations with Yandex in July 2017. As a part of the deal, Yandex retained a 59.3% stake while Uber held a 36.6% stake.
"Yandex has gross bookings of $1.01 billion on an annualized basis, while Uber had just over half of that, at $566 million, according to Bloomberg. Yandex, often called the "Google of Russia" is a well established brand and has an extensive mapping database which puts it at an advantage over Uber, reports the New York Times. So rather than fighting over market share, a merger made sense." by Thuy Ong for The Verge
This acquisition enables Uber to focus on its core and more profitable business segments. These are located in larger cities in the U.S. and Europe and concentrated in its taxi and food delivery operations.
Post-Pandemic Hurdles
The pandemic provided a significant boost to Uber's delivery business as sales grew from $ 1.9B to $ 4.8B in 2020. At the same time, its taxi-sales plummeted as consumers were locked at home. The post-lockdown times are proving difficult for Uber who now faces a shortage of drivers and rising prices which may spur consumers to look for alternatives.
"Khosrowshahi told analysts during a conference call that the ride-hailing service was nearly back to full strength. But he conceded a shortage of drivers in some major markets like San Francisco and New York is resulting in higher fares than Uber believes will be acceptable to passengers over time." by Michael Liedtke for AP
BENCHMARK'S TAKE
- The pandemic has been a two-edged sword for Uber, boosting its food delivery business but slashing its mobility operations
- Competition is intense but Uber manages to stand its ground by defending core markets and divesting non-core activities and non-core locations
- Once the pandemic fades away, the food delivery segment could grow further from a larger base while the EBITDA profitable rides business will pick up again
- We are keeping our stake in Uber unchanged
Disclaimer
Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.
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