Uber announced that it’s buying a majority stake in grocery delivery company Cornershop.
The Financial Times reported that with the purchase of the Latin American company, Uber shows that it’s continuing to diversify its business. Uber’s Latin American revenue has been slowing, and it wants to reverse that trend.
The purchase is expected to be completed by 2020, and Cornershop existing leadership will continue, with the board having a new Uber majority. Right now, the company has a presence in Mexico, Peru, Chile and Toronto.
Uber’s Latin America business saw a drop of 24% from Q2 of last year and this year, while other parts of its business flourished. The company has differentiated itself by the way it delves into other segments of its business, like Uber Eats, its delivery service.
Despite a high-profile initial public offering (IPO) earlier this year, there are still questions from investors on whether the company can actually turn a profit. In the company’s last quarterly earnings report, the company’s losses beat expectations and its revenue came in below projections.
The company’s stock is 34% lower than it started at the last three months, which brought its market cap down to US$49 billion, which is much lower than the US$76 billion that it was valued at in May when it went public.
Uber’s losses have even affected other companies. PayPal lost US$228 million in the third quarter partially due to Uber’s failure to make money.
PayPal’s US$500 million investment in Uber just before its IPO dropped 34%. Its investment in Latin American retailer MercadoLibre dropped 10%.
In an email to Bloomberg, a PayPal spokeswoman indicated that the company’s quarterly guidance does not incorporate expectations for Uber and MercadoLibre’s stock price performance during the quarter, given the “inherent difficulty” in predicting stock market fluctuations for publicly traded companies. As a result, PayPal stated it has elected to update the market after quarter-end to disclose the impact on its earnings. In 2019, including the loss being recognized in the third quarter, the company’s investments have resulted in US$0.11 in unrealized gains, PayPal stated.
Uber used PayPal’s Pay With Venmo platform for processing payments. Slow growth and widening losses have negatively affected Uber’s stock.
Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.