Market Overview

Uber's Shares Sag On Report Of Large Sale

Uber's Shares Sag On Report Of Large Sale

Shares of Uber Technologies (NYSE: UBER) sank 5% Friday on a report that Goldman Sachs (NYSE: GS) is looking to unload 38 million shares in a block trade.

According to a midday Seeking Alpha brief, the shares up for sale are being offered between a range of $53.90 and $56.13, a 4% discount to Thursday's closing price at the low end of the range.

A potential seller (or sellers) was not identified but the update referenced the likely candidates could include large holders like SoftBank (OTC US: SFTBY), Benchmark Capital and Morgan Stanley (NYSE: MS), among others.

The reported trade represents slightly more than 2% of Uber's 1.7 billion shares outstanding as of the close of the third quarter. Approximately 21 million shares of UBER have traded hands daily over the last three months.

There is no real indication on what the sale of the stock might mean for the company's brokerage unit, Uber Freight.

Analysts have questioned how the cash-burning brokerage segment fits under its ride-sharing umbrella of services. Uber has been tidying the balance sheet by divesting noncore businesses and lowering its interests in other bets to stem the downturn in demand for mobility during the pandemic.

In October, the segment raised $500 million from an investor group led by Greenbriar Equity Group, valuing the unit at $3.3 billion following the transaction. Uber Freight's European business was sold to Berlin-based digital freight brokerage sennder in September.

On Uber's third-quarter earnings call in November, CFO Nelson Chai said he believed the capital raise would allow the company to fund the Freight segment "until it's profitable."

During the quarter, Uber recorded a net loss of $1.1 billion and an adjusted earnings before interest, taxes, depreciation and amortization loss of $625 million, 7% worse year-over-year. The Freight segment accounted for $73 million of the adjusted EBITDA loss, a 10% improvement compared to the year-ago quarter as adjusted net revenue climbed 32% to $288 million.

The company recently began sharing data between its Uber Direct unit, which provides last-mile delivery to homes and businesses, and the brokerage segment. The goal is to meld information on all miles of freight delivery – first, middle and last – into a usable real-time picture of activity in various stages of the supply chain for its Freight customers.

The Freight segment now sells parcel and final-mile delivery through Uber Direct to its truckload freight customers.

"We're here for the long haul," Uber Freight head Lior Ron said about the company's commitment to its brokerage business in an interview with FreightWaves following the October capital raise.

Shares of UBER are up nearly 60% since the end of October when it became clear that California's Proposition 22, allowing gig-economy companies to treat app-based drivers as independent contractors, would pass an Election Day vote.

Click for more FreightWaves articles by Todd Maiden.


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