As Uber reported extremely encouraging financial results yesterday with not so positive ones from its investee Zomato, fresh troubles seem to be brewing in for the latter. Having incurred a nearly $707Mn unrealised loss in 2022 alone, it seems only prudent, that Uber has reportedly decided to sell off its 7.8% block of shares in Zomato today. For Zomato, after massive institutional sell off post end of IPO lock-in, this is perhaps one of the biggest setbacks.
Uber on the other hand, reported positive free cash flow, partially laying to rest fears, that it won’t be able to self-fund itself. And following fiscal prudence, it has now decided to sell the Zomato stake that it acquired during Uber Eats India sell-off, to arrest the losses it had occurred. Reports of the sell-off had already started pouring in yesterday.
The ride-hailing giant, which reported a net loss of $2.6 billion for the second quarter, said Tuesday that it assumed an unrealized loss of $707 million on its Zomato investment in the first half of this year and the quarter that ended in June 30, 2022.
Uber sold its Uber Eats food delivery business in India to Zomato for $206 million, culminating years of failed but hard attempts to create a viable food delivery business in India. Still, Uber got a decent amount back along with a 9.99% stake in the loss-making Zomato. It seems to have offloaded a minor stake during earlier sales, with the rest of it being loaded off today.
When Zomato listed on the India public markets in 2021, Uber’s stake was worth $1.2 billion. The food delivery business expects EBIDTA break-even by the Q4 of 2023.
