Partnerships / Acquisitions

Uber Moves Into LATAM Grocery Delivery With Cornershop Buy

Uber Continues To Diversify With Cornershop Purchase

Uber announced that it’s buying a majority stake in grocery delivery company Cornershop.

CNBC is reporting that with the purchase of the Latin American company, Uber shows that it’s continuing to diversify its business. Uber’s Latin American revenue has been slowing, and it wants to reverse that trend.

The purchase is expected to be completed by 2020, and Cornershop existing leadership will continue, with the board having a new Uber majority. Right now, the company has a presence in Mexico, Peru, Chile and Toronto. 

Uber’s Latin America business saw a drop of 24 percent from Q2 of last year and this year, while other parts of its business flourished. The company has differentiated itself by the way it delves into other segments of its business, like Uber Eats, its delivery service.

Despite a high-profile initial public offering (IPO) earlier this year, there are still questions from investors on whether the company can actually turn a profit. In the company’s last quarterly earnings report, the company’s losses beat expectations and its revenue came in below projections.

The company’s stock is 34 percent lower than it started at the last three months, which brought its market cap down to $49 billion, which is much lower than the $76 billion that it was valued at in May when it went public.

Uber’s losses have even affected other companies

PayPal lost $228 million in the third quarter partially due to Uber’s failure to make money.

PayPal’s $500 million investment in Uber just before its IPO dropped 34 percent. Its investment in Latin American retailer MercadoLibre dropped 10 percent.

In an email to Bloomberg, a PayPal spokeswoman indicated that the company’s quarterly guidance does not incorporate expectations for Uber and MercadoLibre’s stock price performance during the quarter, given the “inherent difficulty” in predicting stock market fluctuations for publicly traded companies. As a result, PayPal said it has elected to update the market after quarter-end to disclose the impact on its earnings. In 2019, including the loss being recognized in the third quarter, the company’s investments have resulted in $0.11 in unrealized gains, PayPal stated.

Uber used PayPal’s Pay With Venmo platform for processing payments. Slow growth and widening losses have negatively affected Uber’s stock.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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