The freight division of ride-sharing giant Uber is making news today as CNBC reports this subsidiary of the brand is set to buy an operation called Transplane for $2.25 billion.
In purchasing Transplane from TPG capital, it seems that Uber Freight is going to pay in the same kind of awkward way that an unprepared diner might settle a bill in a restaurant – putting $750 million in Uber stock into the deal, and paying the “remainder in cash.”
“The deal, the companies said, will create one of the leading logistics technology platforms,” writes Jessica Bursztynsky. “The companies said the acquisition comes at a time of accelerated transformation in logistics.”
Although it might sound like a lot of money, digging into Uber’s financial operations shows that it’s only a drop in the bucket compared to Uber Freight’s overall size and revenue model – in the first quarter of 2020, Uber Freight reported a staggering $198 billion in revenue.
Compare that to $4.7 billion for subdivision Uber Eats in the same time frame, and keep in mind that Uber Eats represents 27% of the entire food delivery market nationwide.
In addition, there is rapid growth for Uber Freight, for example, a doubling of owner operator contracts through the six months preceding April of this year, and a 300% increase year-over-year as of this May.
The Uber blog details new initiatives at Uber Freight, like teaming up with Santa for Christmas and introducing a new shipping program in Canada.
Keep an eye on this part of Uber’s transportation business, as newfangled projects like flying taxis get put on the back burner, and the ride-sharing segment already battered by the coronavirus deals with a host of rivals.
Behind the scenes, freight and cargo handling represents the lion’s share of Uber’s business.
Meanwhile, Uber is slightly down over 1-month, 3-month and 6-month horizons. Keep an eye out for change in this leading transportation equity.