Uber’s Q3 Loss Widens as SoftBank Makes First Offer on Shares
Uber Technologies Inc.’s third quarter loss widened to $1.46 billion, coinciding with a SoftBank-led consortium’s bid to buy a large block of the ride-hailing company’s stock.
Uber reported its financials to shareholders as part of a formal tender offer, revealing a loss as it faces fierce competition, legal challenges, and regulatory scrutiny. The documents signal the formal launch of the SoftBank-led deal to invest between $7 billion and $10 billion in the company.
In an emailed statement, reported by Bloomberg, Softbank (SBHGF) revealed that it has found likely sellers for the tender offer in at least two of Uber’s early backers. These are shares from existing shareholders, sold at a price that values Uber at $48 billion—30% less than its previous private valuation of nearly $70 billion.
“SoftBank and Dragoneer have received indications from Benchmark (BHE), Menlo Ventures, and other early investors of their intent to sell shares in the tender offer,” a spokesman for SoftBank wrote in the statement. (Dragoneer Investment Group is part of the consortium.) “Any sales by these shareholders will be pursuant to the same terms and conditions as will be offered to all other eligible holders that participate in the tender offer.”
General Atlantic and Russian company DST—both of whom had previously been in talks to buy stock—dropped out of the deal, reports Bloomberg. Remaining bidders include SoftBank, Dragoneer, TPG (TSLX), Tencent Holdings Ltd. (TCEHY) and Sequoia Capital (SEQUOIA-CAPITAL).
Uber’s disclosure revealed that gross bookings, its key metric for demand of ride services, grew 11% to $9.71 billion during the period that ended in September. That’s up from gross bookings of $8.74 billion in Q2 of 2017, said Bloomberg. Net revenue rose 21% to $2.01 billion in the third quarter, while net losses increased 38% from $1.06 billion in the prior period.
The litigation hurdles Uber faces—around the world and close to home—have become increasingly costly. The company also spends vast sums on marketing and ride discounting, particularly in markets like India and the U.S., where competition is especially steep.
As new financial details are revealed, Uber’s shareholders must consider whether to sell shares at the current $32.97-per-share price that SoftBank has offered, or wait for a potential public offering in 2019. For the deal to close, the investor coalition must buy at least 13.4% of Uber shares from existing shareholders, so if enough shareholders choose not to tender, it may have to raise its price.