Uber faces serious troubles as share values drop; competition gains ground
Regionally Uber has Careem to deal with, and though the latter is growing, it is, by itself, no threat to Uber’s existence.
Despite being valued at over $1billion and getting the backing of Chinese counterpart Didi Chuxing in August last year, along with its investment in new technologies like Artificial Intelligence, the market in the Middle is only at 1-2% of its potential addressable population from a total 700 million people who live in the region.
According to Dalia Research, only 1 in 4 people in the Middle East and North Africa’s cities are using their smartphones to order cabs, Reuters reported.
Besides, Uber received $3.5bn in funding from Saudi last year, and announced it’s looking to expand further with goals for 2020 to onboard 100,000 Saudi drivers.
Regionally, Uber looks safe. Internationally it’s struggling.
Raising undervalued money
Wall Street Journal (WSJ) said recently that Uber shareholders are said to have agreed to have already sold a sizeable stake in the ride-hailing leader to an investor group led by SoftBank Group Corp, but at values much below the last valuation in 2016.
Several mutual funds have dropped their estimates of the value of Uber in the leadup to a secondary transaction.
“The transaction implies a $48bn value for Uber,” said WSJ, a 30% discount from the $69bn 2016 valuation.
SoftBank had been seeking a stake of at least 14% in the deal, while WSJ reported at least 20% of Uber’s shares had been tendered, prior to Uber expected 2019 IPO.
Fidelity, a large Uber shareholder, said last month that a new disclosure showed that the value of its holdings of Uber shares dropped from $228 million as of 2014 to $180 million today, a 21% fall in share price.
Principal Funds, also shareholders said as of Nov. 30, it valued the holdings of the company at $7.2 million in its LargeCap Growth Fund I, down from $8.9m, or a 19% drop.
Blackrock’s Uber shares dropped $50m in value as well, or a 16 percent decline.
Bloomberg says rivals have gained steam after a succession of setbacks for Uber, including Chuxing which recently said it raised another round of financing from SoftBank, this time topping $4bn adding to an earlier $5.5bn investment in the company.
In November 2017, Bloomberg reported on a hack from a year earlier that exposed data on 57 million people and that Uber paid a ransom to keep the breach quiet.
Fortune magazine reported recently that Hyundai Motor has invested in Singapore-based ride-hailing firm Grab , Uber’s biggest ride-hailing rival in Southeast Asia.
“Grab did not disclose the value of Hyundai’s investment. Hyundai joined other investors, including Didi Chuxing, SoftBank and Toyota Tsusho (Toyota’s Next Technology Fund) in the latest fundraising round,” Forune reported Grab as saying.
The strategic partnership aims to give Hyundai an inside view into what works in the so-called sharing economy that Grab is a central player in. Grab is now in eight Southeast Asian countries.
“It could also help Hyundai position itself to offer its own mobility services in one of the world’s fastest-growing markets, Southeast Asia. Hyundai is looking into several mobility services including car-sharing and ride-hailing. For instance, Hyundai partnered with WaiveCar in January 2017 to launch a car-sharing program that runs on advertising money, using IONIQ Electric model in the United State. Hyundai opened in October its first company-operated electric car sharing service in Amsterdam, Netherlands,” said Fortune.