Uber’s headlines in the news haven’t been very positive lately. In addition to reports about weak revenues, a recent incident involving a tragic accident further cast a dark cloud over the company. Now, financial news agencies reveal Uber has engaged in a sell-off.
The company’s Southeast Asian endeavors are being sold to a rival. The rival, Grab, may soon find its control of the geographic region’s market reaches massive levels. Without a rival such as Uber competing for customer revenues, Grab should be able to achieve a great financial boost. Of course, the customer base does need to be there for Grab earn profits.
And Grab truly needs to amass a sizable customer base to pay for the purchase of Uber’s business interests. The management of Grab clearly believes this to be possible. Otherwise, the purchase wouldn’t garnered any serious consideration.
Uber seems to be in a significant retreat from the Southeast Asian market. The company, however, won’t be completely disinvested even after the sale goes through. Reportedly, Uber shall maintain a 25% to 30% stake in Grab once the sale/merger completes. Grab certainly isn’t a small company by any measure. The valuation of the business rests at the $6 billion range.
The management of Uber may be coming to the realization this part of the world isn’t One the company can attain any significant profitability. Perhaps a locally-based company would be better positioned for financial achievement. Simply offering ridesharing at cheaper rates than taxis might not be enough for widescale success. Other factors play a role in revenue generation and customer appeal. Grab might be able to handle Uber’s business affairs better than Uber could. It must or else the purchase won’t lead to anything other than potential bankruptcy.
Overall, Uber’s losses have reached $4.5 billion. That’s hardly beneficial for a company wishing to go public soon. Selling off faltering business ventures might prove to be a wise move.