Uber's net loss widens to $1.46bn, stock bid reveals
San Francisco — Uber Technologies’s net loss widened to $1.46bn in the third quarter, according to people with knowledge of the matter, as the ride-hailing leader struggles to fend off competition, legal challenges and regulatory scrutiny.
The San Francisco-based company reported financials to shareholders as part of a formal bid on Tuesday night from a SoftBank Group-led consortium looking to buy a large block of stock. SoftBank said at least two of Uber’s early backers intended to sell. The sale of those shares would value the business at $48bn, a 30% discount to the past private valuation.
General Atlantic and Russia’s DST Global, which had both been in talks to buy stock, dropped out of the deal, said one person, who asked not to be identified because the details are private. The remaining bidders in the group are SoftBank, Dragoneer Investment Group, TPG, Tencent Holdings and Sequoia Capital, which are looking to buy at least 13.4% of outstanding shares, said two people.
"SoftBank and Dragoneer have received indications from Benchmark, Menlo Ventures, and other early investors of their intent to sell shares in the tender offer," a spokesman for SoftBank wrote. "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."
Uber told stockholders that gross bookings, the key yardstick of demand for ride services, rose 11% to $9.71bn in the period that ended in September, compared with $8.74bn in the second quarter, said the people. Net revenue grew 21% to $2.01bn in the third quarter from $1.66bn.
But losses, which had been narrowing in previous quarters, reversed course. The net loss increased 38% from the second quarter, when it was $1.06 billion. Uber has been searching for a chief financial officer to fill a much-needed role ahead of an initial public offering expected in 2019.
"Ride-hailing companies hold out the promise of creating a whole new industry, but it’s tough to make judgments based on their fundamentals," said Masahiko Ishino, an analyst at Tokai Tokyo Securities.
Uber has had a rough year, with the ousting of its former chief executive officer, an exodus in the management ranks and last week’s disclosure of a concealed hack that exposed personal data of 57-million people.
American rival Lyft, meanwhile, is gaining market share. Uber was without a CEO for most of the third quarter — Travis Kalanick resigned under pressure from investors in June, and Dara Khosrowshahi joined in September.
The investor group, which hopes to snap up Uber shares on the cheap, offered to pay $32.97 a share in their opening salvo, said people with knowledge of the matter.
They may increase the bid or walk away if seller demand is insufficient. SoftBank has committed to invest at least another $1bn in Uber at a higher valuation of $69bn if the deal goes through. The blended valuation in the full deal would be $54bn, one person said.
The consortium of buyers has about four weeks to lock in enough investors at the current share price or to offer a higher price. The entire tender process is supposed to conclude by late February.