Market Overview

Pro: Why Uber Spent $3.1B To Buy Middle Eastern Rival

Pro: Why Uber Spent $3.1B To Buy Middle Eastern Rival

Ahead of a planned initial public offering in the coming months, ride-hailing company Uber spent $3.1 billion to buy Middle Eastern rival Careem.

What Happened

Uber and rival Lyft's story is a tale of "David versus Goliath," tech investor Ann Winblad told CNBC Tuesday. While some investors prefer investing in "David" — Lyft — the fact remains Uber has expanded its dominance with the $3.1-billion acquisition of Careem, she said. 

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Lyft is expected to host its IPO in the coming days, and the company is more of a pure-play on ride-hailing, Winblad said. By comparison, Uber has exposure to nearly all segments of transportation, including self-driving, so its IPO will be "much more sensational," she said. 

Why It's Important

Uber continues to spread itself across the world, which does create some monopoly related concerns. But Winblad said this isn't necessarily a worry for regulators when including Uber in the broader picture of the overall mobility and transportation market.

For example, Uber does have exposure to self-driving cars, but there are already more than a dozen start-ups that have already generated worldwide scale and can rival Uber, she said. 

What's Next

Despite Uber's new acquisition, it will be difficult for investors to determine whether the company is "making real progress" given a "hazy" timeline toward profitability, Winblad said. 

Retail investors are likely to be buyers of Uber's stock given the surge in the company's popularity over the years, in her view. 

Related Links:

Uber Freight Announces European Expansion

Economist: Lyft Has Better Path To Profitability Than Uber, But Concerns Remain

Photo courtesy of Uber. 

Posted-In: Ann Winblad CNBC IPO LyftM&A News IPOs Media Best of Benzinga


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