While COVID 19 has had a bad effect on most businesses around the world, almost none other was more affected than ride hailing companies like Uber. The company was already struggling pre pandemic, and coronavirus just poured gasoline over fire. The situation has forced the San Francisco based tech giant to reevaluate its business strategy, which has resulted in the company deciding to sell off $500 million worth of stocks of its Uber Freight business to help the growing but still unprofitable platform.
The company said on Friday that an investor group led by New York-based investment firm Greenbriar Equity Group has committed to invest $500 million in a Series A preferred stock financing for Uber Freight. The deal, which values the logistics arm of Uber at $3.3 billion, will ensure that it still retains a majority in the platform after the round is completed. However, Greenbriar managing partners Michael Weiss and Jill Raker will join the Uber Freight board.
Uber Freight has been steadily growing. Ever since the platform launched in 2017, and became a separate entity in 2018, it has been on an upward trajectory. However, the slope of said trajectory is not good enough for its parent company, which is already burning through cash to expand its other businesses, including the main Uber app and Uber Eats, which recently acquired Postmates. Thus, when the platform lost $49 million in Q2 2020 despite reeling in $211 million in revenue, Uber was not happy.
Therefore, the company has decided to go a different route with Uber Freight, adding in partners and raising capital to alleviate some of the burden that comes with an endeavour so large. Uber Freight will use the capital to continue to scale the logistics platform.
As of yet, the service is available in Canada and Europe, and works as a separate platform from the main Uber app, along with new navigation features to make searching for and filtering loads easier to customize.