Breaking news this morning suggests that Uber is selling a large stake in its trucking logistics arm, Uber Freight, to Greenbriar Equity Group, which will reportedly buy $500 million in the ridesharing company’s cargo operation.
“The money will be used to continue to scale the platform and accelerate product development,” writes Ciara Linnane at MarketWatch. “The deal is expected to close in October.”
If you didn’t know that Uber even had a freight side to its business, this is something to watch as you build your transportation portfolio. It’s a significant portion of the U.S. trucking market – where analysts expect Uber Freight to control 6% of the overall market within a few years. That would represent $12 billion in a $117 billion industry.
As for Uber’s overall equity value, the stock is up seven dollars or about 20% year-over-year, but has more than doubled its price since March 18, when Uber swung heavily downward on coronavirus fears.
Let’s point out that Uber hasn’t bested its IPO price since June 2019.
Still, many traders are bullish about Uber’s long-term prospects as it dominates as a consumer household name in ridesharing. It might not be much in China anymore, but Uber is a big deal in the United States.
That said, many analysts believe it will take some grit for Uber to rise to the top of this particular trucking vertical.
“It will take a lot of time, human and financial resources for Uber to build a successful on-demand commercial trucking service,” says Aliya Salakhova, Founder and CMO of Doft, as quoted in a piece by Deborah Lockridge. “For me, the only question is whether Uber’s investors will be patient enough to overcome all the difficulties on their way into the trucking space, or they will give up like they did with UberRush – its restaurant delivery service.”
Being diversified also gives Uber a better toehold in a market that is being characterized for its volatility as a U.S. president tests positive for coronavirus, and general markets prepare to take a tumble this week. Plan accordingly.
