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This article is an in-spirit continuation of the previous one.

India is a growing market for food consumption. Uber Eats has significantly ramped up, with engaging ad campaigns having leading celebrities. Uber Eats does 1/3rd of Swiggy orders, yet the company is being sold for 1/10th of Swiggy’s valuation. Why would Uber sell Eats cheaply after a significant long-term investment in a promising market, just to “cut short-term losses”?

It becomes clear if you look at it as a fire sale, and Uber critically needs capital now. Uber’s IPO is driving this, as it looks to pare down losses to become “healthier”. While the party line is that the sale is to “cut losses”, the real question is “Is an IPO the only way Uber can raise money”? The sale is a strong indication that private investors are no longer willing to back Uber. It is a deeper problem, as Uber stops long-term investments to solve for money to fund its losses.

Lyft, it’s competitor, has also stolen a march by announcing its IPO. Being a second-mover may result in lesser buyer interest. Uber needs the IPO money, and it needs it now. Swiggy is getting a terrific deal. By acquiring a competitor, it cuts losses and accesses a larger delivery/customer network. Swiggy is the ultimate winner here, while Uber is having a tough time.

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Soham Banerjee



The Nonconformist

Hi, I'm Soham. From time to time, I blog here.

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